Banks’ funding models to blame for the crunch
Credit risk transfer instruments in themselves are not to blame for the financial crisis, said Gertrude Tumpel-Gugerell, an executive board member of the European Central Bank (ECB).
She pointed to the increased reliance on market-based funding, particularly in securitisation, as the main worry. Banks' models have shifted from "originate and hold" to "originate, repackage and sell", she said.
Excessive risk appetites coupled with a long period of deregulation were factors that need addressing
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