S&Ds call for all-weather proof safe assets to break vicious circle between banks and states

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Reacting to the European Commission’s plan to create sovereign bond-backed securities (SBBS), by bundling together bonds issued by all 19 Eurozone countries, S&D Group spokesperson on economic and monetary affairs, Pervenche Berès MEP, said:
 
“The Commission’s proposal to create sovereign bond-backed securities falls short of what is really called for. To deepen the European Monetary Union we need a fiscal capacity for the euro area and safe assets capable of breaking the vicious circle between banks and states once and for all. Only with all-weather proof safe assets can taxpayers rest assured that they will not end up paying for the next banking crisis. That investors already now cast doubt on the Commission’s proposal concerning both the market volume and liquidity does not fully bode well for it.”
 
S&D MEP Roberto Gualtieri, the chair of the economic and monetary committee in the European Parliament added:
 
“The sovereign bond-backed securities can provide an additional tool to help banks to diversify their holdings of sovereign bonds. Due to the lack of any mutualisation, the role of this tool is necessarily going to be limited but it is a market test that is worth doing while avoiding any change in the regulatory treatment of sovereign exposures.”
 
 Note to the editor:
 
The creation of sovereign bond-backed securities (SBBS) would need the approval of all Eurozone governments and the European Parliament.

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