Pedro Machado: Interview with Bloomberg
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Pedro Machado, Member of the ECB Supervisory Board, supports reviving securitisation provided there is significant risk transfer, but criticises the political agreement giving insurers a bigger role in unfunded protection for STS synthetic securitisations. He also addresses data centre financing, AI adoption in banking and the integration of the banking market.
Key points
- Synthetic securitisation activity almost doubled between 2022 and 2025
- Prefers absolute risk weight floors and not going below 7% for senior tranches
- Around 85% of banks already use generative AI; cybersecurity is the main challenge
- In the banking union 80% of lending is domestic; cross-border corporate lending is around 15%
Who is affected
Banks, insurers and investors in securitisations and risk transfers
Plain-language version
Pedro Machado, a bank supervisor at the ECB (the euro area's central bank), supports reviving securitisation, bundling loans and passing their risk to other investors, as long as the risk really leaves the bank. But he criticises giving insurers a bigger role in this business. He also notes that 85% of banks already use generative AI and that cybersecurity is the big challenge.
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