Securitisation to the Rescue: The European Capital Markets Union Project, the 
Euro Crisis and the ECB as "Macroeconomic Stabilizer of Last Resort"

Hübner, Marina

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Securitisation to the Rescue: The European Capital Markets Union Project, the Euro Crisis and the ECB as "Macroeconomic Stabilizer of Last Resort"

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Hübner, Marina
International Max Planck Research School on the Social and Political Constitution of the Economy, MPI for the Study of Societies, Max Planck Society;

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Hübner, M. (2016). Securitisation to the Rescue: The European Capital Markets Union Project, the Euro Crisis and the ECB as "Macroeconomic Stabilizer of Last Resort". FEPS Studies.

Cite as: https://hdl.handle.net/11858/00-001M-0000-002C-0BB5-2

Abstract

The European Capital Markets Union (CMU) project is a strong political commitment to market-‐based finance, the new code word for shadow banking. Since securitisation, the financial innovation that triggered the Global Financial Crisis of 2008, is key for market-‐based credit intermediation, its revitalisation has become of strategic importance. Considering that the CMU is an important pillar of European plans to support growth and to complete the European Monetary Union (EMU), what explains that securitisation (and market-‐based finance) have become key for achieving these goals? Challenging arguments on regulatory capture, I claim that this outcome can be explained by not only taking the agency of financial market actors seriously, but also the agency of important EU actors, in particular the European Central Bank (ECB). In a nutshell, I argue that the political plans to strengthen securitisation and market-‐based finance have its roots in the ECB’s efforts to stabilize the euro zone. The unique institutional setting of the EMU has forced the ECB into the role of what I shall call the ‘macroeconomic stabilizer of last resort’. While in 2011-‐2012 economic circumstances called for a swift solution of the Southern European banking crisis through a jointly financed program of bank recapitalisation, intra-‐euro zone risk sharing was not a feasible political option. Yet, the weakness of the Southern European banks undermined the effectiveness of monetary policy while at the same time the ECB’s (bank-‐based) monetary firepower reached its limits. Against this background, the ECB started deliberating on revitalising European securitisation markets in early 2013 both as an attempt to stimulate non-‐bank credit intermediation and to restore monetary steering capacity over the economy. The study is based on documentary analysis and expert interviews. The analysis contributes to ongoing research on ‘public-‐private’ interest alignments in the political system of the European Union and the role of the ECB in shadow markets.