Capital markets-based funding in German banking -securitization and covered bonds

As banks struggle to secure sufficient long-term funding in the wake of the recent crisis there is a risk of a vicious feedback loop into the real economy as banks curtail credit to offset declining net interest earnings. In terms of capital marketsbased funding, European banks have recently been switching away from senior unsecured to covered bonds, while securitization volumes remain fairly marginal. However, concerns are being expressed with regard to the potential impact of covered bonds …