By Charlotte GAUCHON
16 June 2025
In the wake of the 2008 financial crisis, the word "securitisation" has long been associated with opaque and risky finance. Yet this financing tool remains essential to the economy, enabling banks and companies to transform illiquid assets such as loan portfolios into negotiable securities. To restore confidence and revive a healthy market, the European Union has created a quality label: Simple, Transparent and Standardised securitisation (STS). The aim of this framework is to distinguish virtuous securitisation products and make them easier for investors to understand. Understanding the securitisation mechanism is the first step in grasping the importance of this label. Origins and objectives of STS securitisation The subprime crisis highlighted the dangers of excessively complex and opaque securitisations. Subprime mortgages were bundled together and sold to investors who had difficulty assessing the value of the...
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