Central banks call for lower capital requirements on top-quality pooled debt

Bonds based on high-quality loans should benefit from lower capital requirements to kick-start the market in Europe, the Bank of England and European Central Bank (ECB) said on Friday. The two central banks were responding to plans from the European Union's executive, the European Commission, to revive the asset-backed securities (ABS) market to improve funding for companies. The European Commission has proposed a new category of "simple, transparent and standardized" (STS) bonds to give investors confidence in a sector tarnished by the 2007-09 financial crisis.

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