Covered bonds could increase systemic risk

Author: | Published: 21 Oct 2010

Covered bonds have emerged from recent regulatory reforms as a clear favourite among supervisors. But lawyers say they could be riskier than the securitisations they’re meant to substitute.

“Regulators are pushing European banks away from structured instruments towards covered bonds,” said Conor Downey, partner at Paul Hastings in London. “But covered bonds...