Asset securitization (referred to simply as “securitization” in the remainder of this report) is the process by which securities are created by a special purpose entity (SPE) and issued to investors with a right to payments supported by the cash flows from a pool of financial assets held by the SPE. Securitization increases the availability of credit by converting non-tradable financial assets into securities that can be issued to investors and traded on capital markets. The division of the payment rights into “tranches” paid in a specific order and supported by credit enhancement mechanisms provides investors with exposure to diversified credit risks tailored to the investor’s particular risk appetite. Securitization has been an alternative funding source for consumer and mortgage lending in many mature market economies. According to the International Monetary Fund (IMF) (2009), before the collapse of the securitization market in 2007 and 2008, asset-backed securities (ABS) and covered bonds provided between 20 and 60 percent of the funding for new residential mortgage loans originated in the United States, Western Europe, and Australia. As of the end of June 2009, in the United States, nearly 19 percent of the outstanding stock of more than US$ 18 trillion worth of real estate-related loans and consumer credit was funded by private label securitization. Private label mortgage-backed securities (MBS) issued by primary lenders amounted to 26 and 16 percent of all commercial and residential mortgage lending, respectively. Outside the United States, for the same period, more than US$ 1 trillion of assets were funded by securitization. This included emerging markets, where securitization technologies supported a stable supply of housing funding and consumer credit. Of the estimated US$ 4.5 trillion worth of securitized assets globally as of the end of June 2009, more than 85 percent were linked to American retail finance. The global growth of securitized products peaked in most mature jurisdictions by 2007 before declining rapidly due to a lack of liquidity in secondary markets and a decline in primary issuance.