With ideas about how to perfect covered bond laws and structures ricocheting around Europe, the EU is taking an interest. “Given the EU’s desire to harmonize everything, this is an obvious area where it can practise its hobby,” is one credit analyst’s deadpan observation. European intervention could, though, clear up doubts about which bonds qualify for 10% risk weighting – a particular concern for banks given the impending implementation of the Basle II capital adequacy rules.
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