The European Union needs more non-bank finance. Banks are on the back foot. On their own, they won’t be able to fund the jobs and growth the EU is desperate for. Non-bank finance needs to take up the slack.

The European Central Bank and Bank of England have made a good start by identifying the importance of reviving securitisation - the process of packaging loans into bond-like securities which can then be traded on the market. The two central banks have just published a joint paper describing blockages in the system which have all but killed EU securitisation since the financial crisis.

But securitisation is only one piece of the non-bank finance landscape. Similar leadership is needed to invigorate venture capital, equity investment, bond issues for small companies, shadow banking and so forth.

Following the financial crisis, securitisation – in common with other types of market-based finance - has had a bad name. This is only partly deserved. Securitisation certainly shares the blame for the U.S. subprime crisis that triggered the global credit crunch. Banks didn’t just originate mortgage loans and sell them off to third-party investors – something sometimes described as “plain vanilla” securitisation. They engaged in increasingly exotic and wild practices.

Not only did the banks lend to borrowers who were unable to service their loans. They constructed opaque financial instruments – sometimes securitisations of securitisations – in the hope of jacking up promised returns.