The importance of covered bonds in financial crisis

Abstract

Having in consideration the current financial Outlook, this project pretends to display the role of Covered Bonds as an alternative to securitization. Firstly, I’ll address the Mortgage market, namely the European Covered Bond Market, focusing on the main participants of this market, the characteristics of it and it evolved. Secondly, I’ll focus my attention on the assets, defining and elaborating about the Covered Bonds and asset securitization, through the European lenses approach. Lastly, I’ll analyze the Covered Bond Purchase Program launched by the ECB in 2009 and I’ll present my conclusions about how this financial instrument might contribute to a decline in money market term rates, in an easing on funding conditions for credit institutions, also as an encouragement to credit institutions to maintain and expand their lending to final consumers and as a mechanism to improve market liquidity