EU moves step forward to capital market union

The European Union (EU) moved a step forward to its ambitious single capital market union as institutions agreed on reviving the bloc's securitization market on Tuesday.

The EU's three institutions, the European Council, the Parliament and the executive European Commission, agreed on a package that sets out criteria for simple, transparent and standardised securitization, said the commission in a statement.

The deal stood "one of cornerstones" of the Capital Markets Union, the incumbent EU leaders' pivotal project, and was expected to unlock up to 150 billion euros of additional funding to the real economy, said the statement.

"This agreement will free up bank lending so that more financing can go towards supporting our companies and households," said Valdis Dombrovskis, the commission's vice president responsible for Financial Stability, Financial Services and Capital Markets Union.

According to the commission, securitization can allow diversification of funding sources and a broader distribution of risk by allowing banks to transfer the risk of some exposures to other institutions or long-term investors, such as insurance companies and asset managers.