"The European covered bond market is one of the most dynamic
segments of the European capital market. As such it is one of
the main driving forces behind the integration of European
financial and mortgage markets" (European Covered Bond Fact
Book, 2007). What is intriguing is that Belgian issuers
have yet to embrace this market. Belgium has an open economy,
and is at the heart of Europe. Could the lack of deals mean
that Belgian legislation presents obstacles to Belgian credit
institutions wishing to issue covered bonds?
No legal framework Unlike most European countries, Belgium
does not have a dedicated legal framework to ease the use of
covered bonds by Belgian issuers. Most such frameworks provide
for a local supervisory regime. Where necessary, they enable an
appropriate legal mechanism to segregate the assets of the
cover pool while on the balance sheet of the issuer from the
other assets on its...