The Bank of England and the European Central Bank made proposals Friday to boost the market for asset-backed securities in the European Union, which has been in a slump since the financial crisis.

In a joint discussion paper, the central banks say that securitization market was unfairly tarnished and that a well functioning market can help provide credit to businesses.

 “Securitization can support greater funding diversification, free up capital to allow banks to extend new credit to the real economy, and provide non-bank investors, such as insurance companies and pension funds, with access to a broader pool of assets,” the Bank of England said in a press release accompany the proposals.

The proposals come one month after the central banks said regulators had been too tough on the sector and called for moves to kick-start the market, including a single definition of “high quality” securitizations as well as regulations based on the actual performance of deals in a given category.

The European Commission has also pledged its support for a high quality securitization label.

At €1.5 trillion ($2 trillion) outstanding, Europe’s securitization market is only about a third of the size it was at its peak, in 2009, according to figures from the Association for Financial Markets in Europe. It is only about a quarter of the size of the U.S. market.  

Friday’s proposals outline three steps for reforming the market:  the product needs to be simple and transparent to investors; banks need to have incentives to originate and monitor the loans that they make prudently; and investors need to have access to a sufficient data to understand how the loans backing a securitization will perform across a wide variety of circumstances.

The central banks have asked for comments on the proposals.

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