A Securitization Scheme for Resolving Europe’s Problem Loans

This chapter proposes a comprehensive, pan-European way of addressing the issue of non-performing exposures. We contend that securitization is the most effective way for banks to sell the bulk of their troubled loans. To this end, we propose a numerical example to describe the main characteristics of a common scheme of securitization to be applied at the European level. Such a scheme, as a European blueprint for implementation at the national level, is meant to attract funds from a wide array of investors, with a public support compatible with the current rules on state aid.