The Future of Financial Innovations Derived from the Lessons of Securitization

摘要

Securitization is an innovation that offers many benefits. It converts unique and different obligations by different obligors into similar obligations of one obligor, that can be tradable. By pooling debts and other obligations of different amounts and risks, it pools and converts a large number of these varied debt obligations into standardized obligations and renders them tradable. Consequently, securitization increases the availability of credit, and lowers the cost of borrowing.1 Borrowers can then borrow more and consume more, or create and offer more valuable assets or services. Consumption offers more jobs and raises the level of the economic standards. Thus, securitization encourages borrowing, which raises economic well-being.