Originators should have a direct interest in ensuring that all risks (including those of correlated defaults) are captured adequately – for instance by retaining a vertical slice of securitisations. Provided the instruments are designed in a way which makes microeconomic risk-taking compatible with sound macroeconomic outcomes, they can play an effective role as a source of funding for the banking sector.
They will thereby also contribute to reliable and properly priced lending to enterprises – which is the most important aspect from an economic perspective. In a nutshell, the internationally coordinated reforms should substantially increase the stability of the financial system. On balance, they will probably imply more moderate earnings prospects in the financial sector.