This event will delve into the importance of mortgage markets and mortgage-backed securities (MBS) for monetary policy transmission and will shed light on their potential as a common European safe asset.
Background and general questions
Mortgage-backed securities (MBS) are vital for monetary policy transmission, as they enhance the liquidity and stability of mortgage markets. By securitizing mortgages, MBS allow monetary policy actions, such as interest rate changes, to more effectively influence mortgage credit availability and cost. This process distributes risk and improves credit allocation efficiency, supporting economic growth and stability. In the US, government-sponsored enterprises (GSEs) like Fannie Mae and Freddie Mac have promoted liquidity in the secondary mortgage market, creating a robust MBS market that supports monetary policy actions like quantitative easing (QE) and quantitative tightening (QT). This well-developed market has enabled the Federal Reserve to effectively implement these policies, contributing to financial system stability as well. The success of the US model suggests that Europe could adopt a similar approach which would support monetary policy transmission and, at the same time, create a common safe asset.
Could a European equivalent of Fannie Mae and Freddie Mac establish a standardized and liquid MBS market and thus enhance financial stability and integration within the euro area? How can Europe’s unique institutional and regulatory landscape be taken into account, including in the vital area of market infrastructure (clearing, settlement, etc.? What political and technical impetus from the European Commission, governments and central banks is needed to help these concepts progress from potential to reality? Can the UK – outside both the euro area and the EU – although home to the biggest capital market center in Europe and undergoing a welcome rapprochement with the EU – play a constructive role helping to develop this market – and if so, how?
Title: A Promising Common Safe Asset – European MBS
Event details: Tuesday, 10 June 2025 | Start: 02:00 PM | End: 06:00 PM
Venue: The event is planned both, online via Webex and onsite at the Oesterreichische Nationalbank, Otto-Wagner-Platz 3, 1090 Vienna.
Participants: Representatives of the financial sector, the OeNB and the Austrian Ministry of Finance (registration here).