Pedro Machado, Member of the ECB’s Supervisory Board, delivered a keynote at the LBBW Fixed Income Forum in Frankfurt on 24 March 2026, addressing the expanding role of synthetic risk transfers in European banking. He highlighted that securitisation, long a polarising topic, is evolving beyond traditional funding tools to include capital-relief structures, particularly synthetic securitisations, which allow banks to transfer credit risk without removing loans from their balance sheets.
Machado noted that the EU has become the largest market for synthetic securitisations, with issuance volumes nearly doubling between 2023 and 2025. These instruments help banks optimise capital allocation and support new lending, but they also require careful supervision to ensure genuine risk transfer, transparency, and financial stability. He stressed that synthetic securitisations must be assessed in the context of overall bank balance sheets and systemic risk, considering factors such as leverage, rollover needs, and the interconnectedness of originators and protection providers.
International oversight aligns with the ECB’s perspective. Reports from the Basel Committee and BIS indicate that post-crisis reforms have simplified structures and increased robustness, yet disclosure gaps and bilateral deals remain concerns. Machado emphasized the ECB’s fast-track process for simple securitisations, reducing approval times and providing clearer guidance to issuers, aiming to foster a more dynamic and transparent EU market.
In conclusion, Machado underscored three points: synthetic risk transfers are now central to European banks’ capital management; the framework must balance innovation with stability; and securitisation should complement broader capital market development rather than replace it. The ECB’s message is clear: Europe can expand securitisation responsibly, maintaining prudent risk management while mobilising private capital to support the real economy.
