A meeting on an initiative to promote a covered bond “label” will be held on 29 April, with a European Central Bank official having last week voiced support for the project at a European Covered Bond Council plenary meeting.

Michel Stubbe, head of the market operations analysis division at the ECB – speaking as an expert without prejudging any decision of the ECB governing council – highlighted at the meeting how many changes the European financial markets have been undergoing in their structure and supervision, and said that covered bonds were being affected by many elements of this.

“The covered bond market is really at the intersection of these many different directions of financial reform,” he said, “both from the issuer perspective and the investor perspective.”

He said that it is very important that this is addressed in a forward-looking way.

“We believe that the labelling initiative is indeed a good basis to carry forward this continuous improvement of the covered bond market in line with the challenges to come,” said Stubbe. “We are ready to play a role of catalyst at the ECB to make sure that the industry makes good progress.”

The meeting, involving market participants and regulators, follows a similar one last year.

Stubbe said that a label must create a boundary between what is and what is not a covered bond. He said that it would also involve “value-added services”, such as transparency about products – something being addressed by the CBIC through national data templates and the ECBC through its comparative website – and post-trade transparency.

Stubbe said that while a definition did not have to be narrow, it should not be so broad as to be ineffective. It could, he added, be “a big resource saver” for investors and regulators.

“If then it appears that with experience the label really makes a difference, this would have to be taken into consideration when reviewing collateral frameworks,” he said. “But only if a label really makes a difference, in particular with regard to liquidity.”