The role of securitisation in funding economic activity and growth
A speech by Greg Medcraft, Chairman, Australian Securities and Investments Commission at the Global ABS Conference (Barcelona, Spain), 7 June 2017
Good afternoon, everyone. And thank you, AFME, for inviting me to speak today. It is always a great pleasure for me to attend these industry-focused events, even though I now wear the ‘hat’ of the markets regulator. This is because engagement between regulators and industry is critical.
Today I wanted to comment on the role of securitisation in funding economic activity and growth.
To put the comments I will make in context, I have recently been involved as a Global Steward of the World Economic Forum’s (WEF) Long-Term Investing, Infrastructure and Development Initiative.
The WEF and others have been doing a lot of work trying to encourage long-term development through the capital markets for a number of years now. However, every time we meet, I am struck by the enormity of the challenge the world faces in funding economic activity – and ensuring finance is channelled to the right areas where it can make a real contribution to development.
As part of this work, we know that there is currently a $1 trillion annual shortfall in available finance for infrastructure projects around the globe. Governments and other traditional sources of funding, including banks, cannot hope to close this gap on their own. The same applies to funding the real economy in many parts of the world, whether it be consumers or business. Fiscal constraints and increased regulatory requirements since the global financial crisis (GFC) are arguably restricting the ability of these bodies to support economic activity.
The point I want to make is that, when we talk about economic activity and growth, we need to remember that we are not just talking about numbers. We are talking about the ability to provide funds for much needed development and progress. Finance has a real impact on the lives of people around the world.
With this in mind, I would like to cover three topics:
- the importance of securitisation and capital markets as an alternate source of finance
- harmonisation and the risks of fragmentation
- innovation, digital disruption and the future for securitisation.