There was a dramatic increase in the complexity of securitised products prior to the crisis, owing largely to misaligned incentives and investors’ search for yield, which, in particular, made the valuation and risk assessment of these products extremely complex and difficult. Chart 3: Securitisation issuance in Europe (in EUR billions)  Source: European Securitisation Forum.
In contrast, the covered bond market has been more sheltered from these incentive problems than securitisation markets, partly because traditional covered bonds have a simpler structure. This makes the overall market more transparent, and the valuation and risk assessment easier. Covered bonds also have a much stricter regulatory framework.