Covered bonds have played a vital role in the banking sector for many centuries, securing a range of macroprudential features. These features encompass various aspects such as tradition, financial stability, market innovation, and the growing focus on ESG elements in recent times.
The implementation of the Covered Bond Directive, along with factors like inflationary trends, evolving monetary policies, and the profound impact of the COVID-19 pandemic on all aspects of life, housing markets, and market strategies, have made covered bonds even more significant in the European financial landscape over the past three years.
Covered Bonds serve as a connection between harmonised European financial innovation and the enduring traditions embedded in national legal frameworks.
Read the latest article of Nicolas Michiels in Bank- en Financieel Recht – Droit bancaire et financier (Larcier/Intersentia) which focuses on the implementation of the Covered Bond Directive and the similarities and differences between covered bond regulatory frameworks in the EU, UK and US. It furthermore aims to provide a comprehensive overview of the key legal details of the new/updated covered bond legislation (or the need for it) in the individual countries.
In many jurisdictions, the introduction of covered bonds has had several positive outcomes. One of the significant benefits is the increased availability of affordable mortgages for borrowers. This has provided individuals with more options and flexibility when it comes to securing financing for their most significant life investment, namely, homeownership. Additionally, lenders have also gained access to a wider range of funding choices, enabling them to better meet the diverse needs of borrowers. Moreover, consumers now have more long-term borrowing options, allowing them to select financing terms that align with their financial goals and preferences.
Publication - Covered bonds in de Europese Unie, de Verenigde Staten en het Verenigd Koninkrijk: een rechtsvergelijkende studie
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