Ministers agree a common position aimed at freeing bank capital, supporting growth and strengthening Europe’s financial architecture ahead of talks with Parliament.

Brussels — In a move designed to channel more private capital into the European economy, the Council of the European Union has agreed on a common position to revive the EU’s securitisation market. The agreement signals renewed political momentum behind a policy tool long seen as underused in Europe, yet potentially powerful in supporting investment, competitiveness and long-term growth.

Securitisation allows banks to bundle loans—such as mortgages or loans to small and medium-sized enterprises—and sell them to investors. By transferring part of the risk off their balance sheets, banks can free up capital to finance new lending. EU policymakers believe that a well-regulated and transparent securitisation framework can help close the investment gap without undermining financial stability.

The Council’s position aims to recalibrate rules introduced after the global financial crisis, which many market participants have described as overly restrictive. While these safeguards were designed to prevent a repeat of past excesses, officials now argue that the pendulum swung too far, leaving Europe with a securitisation market far smaller than those in other major economies.

Under the agreed approach, the Council supports targeted adjustments to capital requirements and due diligence obligations, while maintaining strict standards for transparency and risk retention. The objective is not deregulation, ministers stress, but smarter regulation—rules that distinguish between complex, high-risk structures and simpler, more transparent transactions.

Supporters of the initiative say the changes could unlock significant funding for priority areas such as the green transition, digitalisation and innovation. By mobilising institutional investors and channelling savings into the real economy, securitisation is increasingly framed as a complement to public spending at a time when fiscal space remains constrained.

The agreement also reflects broader efforts to deepen the EU’s Capital Markets Union, a long-standing project aimed at reducing Europe’s reliance on bank lending and creating more integrated financial markets. Reviving securitisation is seen as a practical step toward diversifying funding sources for businesses, particularly for smaller firms that struggle to access capital markets directly.

At the same time, memories of the financial crisis continue to shape the debate. Consumer groups and some lawmakers have warned that any relaxation of rules must not weaken investor protection or reintroduce opacity into financial products. Council officials insist that lessons from the past have been fully absorbed, pointing to the EU’s framework for simple, transparent and standardised securitisations as a cornerstone of the approach.

With the Council’s position now agreed, attention turns to negotiations with the European Parliament. Lawmakers are expected to scrutinise the proposals closely, balancing the push for growth with concerns about risk and oversight. The talks will determine the final shape of the reform and how quickly it can be implemented.

If adopted, the revised framework could mark a turning point for Europe’s securitisation market. For policymakers, the stakes are high: success would mean unlocking private capital to support strategic priorities, while failure could reinforce perceptions that Europe struggles to translate ambition into effective financial tools.

As the year draws to a close, the agreement sends a clear signal that the EU is willing to revisit post-crisis rules in light of new economic realities. Whether securitisation can reclaim a meaningful role in Europe’s financial system will now depend on the outcome of interinstitutional talks—and on the market’s confidence that the balance between opportunity and prudence has been struck.