Third, the potential benefits of securitisation are twofold: it can be used as a way to fund an asset and as a means of transferring risk. It can free up bank capital, allowing banks to extend new credit to the real economy.
Likewise, the pricing of risks is more effective when securities are assessed by the market rather than being dormant on banks’ balance sheets. All this may support the transmission of monetary policy, where the bank lending channel may otherwise be impaired.