The European Central Bank is talking up securitization as a way to boost lending to small and medium sized enterprises (SMEs), which are the backbone of the region’s economy and have few alternatives to bank funding.

Loans to small companies are capital-intensive, and Europe’s banks are under pressure to deleverage in order to meet stricter capital requirements. Securitizing these loans would get them off banks’ balance sheets, freeing up capital to make more loans.

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