Central banker reactions to shifting global markets featured heavily last week, with ECB President Mario Draghi issuing a call-to-action to all Eurozone policy makers to address increasing concerns in global markets. Further, China’s PBOC Governor, Zhou Xiaochuan, delivered remarks designed to reassure markets. Here at home, Janet Yellen reported to Congress that the economic risks could delay rate increases (and that negative rates are not off the table).
It’s worth noting that central banks, including the ECB and PBOC, view promoting a healthy securitization market as an important transmission mechanism for monetary policy.
In an earlier speech, Draghi identified the securitization market as crucial to the transmission mechanism linking central bank policy to Eurozone lending. He’s not alone. Eurozone regulators including the Basel Committee, the European Banking Authority, the Bank of England, and the European Commission’s Capital Markets union have published a “plethora of papers” in their goal to revive ABS issuance.
China may be a step ahead of the Eurozone as it relates to policy success. PeerIQ gave a talk at last month’s Continuum Credit SF conference, highlighting the role of securitization for marketplace lenders and sharing the following analysis pairing policy changes with dramatic ABS growth in China:
The regulatory urgency is driven by the impending Basel III phase-in. Regulators see a transparent and high quality ABS market as a channel for encouraging non-bank sources of lending, expanding credit to SMEs and non-bank institutions, and diversifying risk concentrations.
As for PeerIQ, we’re excited to play a small role on a problem that is global in scope and has direct impact on the real economy.
Conferences:
- Ram will be at the NY Hedge Fund Roundtable on Monday February 22nd, moderating the panel: “P2P Lending: How Large Investors Can Access the Asset Class.” .
- PeerIQ will be speaking on the ‘Development of Securitization in Marketplace Lending’ panel at ABS Vegas on February 29th
- PeerIQ will be speaking at Lend It on April 11th in San Francisco
Industry Update:
- Student Lender Earnest Breaks Fintech Deal Drought (WSJ, 2/11/16) Earnest securitization is the first of the year, with several more to come —PeerIQ noted for providing data on last year’s securitization trends
- Lending Club Posts Second-Ever Profit as Revenue Doubles (WSJ, 2/11/16) Lending Club Fourth-quarter loan volume increased 82% to $2.58 billion, extending $8.4 billion in credit in 2015
- Alternative Lenders Play with Fire by Discarding FICO (American Banker, 2/11/16) What is the predictive value of new metrics used for credit scoring?—We can’t truly know until the next recession
- Marketplace Lenders Have Duty to Report Credit Data (American Banker, 2/5/16) Not all marketplace lenders are reporting credit bureau information
- Credit-Default Swaps are Back as Investor Fear Grows (Bloomberg, 2/12/16) Credit derivative trade volumes doubled month-over-month
- Fintech: Transformation, or Global Revolution? (Huffingtonpost, 2/4/16) For the developing world, FinTech will be “nothing less than a financial revolution”
- FDIC: Supervisory Insights (FDIC, Feb 2016) The FDIC offers resources for bank boards of directors and management teams to consider when engaging in marketplace lending activity