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Sowing the Seeds of Deeper Capital Markets: Europe’s Problem With Risk

The debate over raising the UCITS 10% single-issuer limit for securitisations highlights a broader challenge facing Europe’s capital markets. While policymakers seek deeper capital markets, greater investment, and diverse sources of financing for the real economy, there remains a reluctance to embrace the level of risk-taking that market-based finance requires.

Europe cannot build deeper securitisation markets by encouraging issuance alone; it also needs rules that allow investors to participate at meaningful scale. The UCITS 10% single-issuer limit was...

The growing debate over whether to raise the UCITS 10% single-issuer limit for securitisations reveals a lot about Europe’s relationship with risk. Europe wants deeper capital markets, more investment...