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Reviving Europe's repackaged debt market to fund economic recovery will take years and hinge on a reinvention of the sector rather than quick regulatory tweaks, bankers and regulators say. The securitized debt, also known as asset-backed securities or ABS, is created by banks pooling mortgages, and corporate, auto or credit card loans and selling them to insurers, pension funds and even the European Central Bank.The EU market for this debt has dwindled since the market based on subprime U.S. home loans froze in 2007, sowing the seeds of a three-year global financial crisis and instilling a lasting distrust of the sector.ABS makes up only about 1 percent of insurer holdings and capital charges planned by European insurance regulators remain enormous compared with historical default rates for the products, industry lobby Insurance Europe said.In contrast, the U.S. market has sprung back from 934 billion euros in 2008 to 1.5 trillion euros last year.The Basel Committee is set to ease its planned bank capital charges on securitized debt later this year but is not expected to push them even lower for top quality ABS as Europe wants.
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