Scepticism greets ECB’s criticism of MBS as cover

European Central Bank criticism of a proposed waiver in CRD III allowing unlimited use of senior units of self-originated MBS in cover pools surprised many market participants, who have said that the criticism, revealed on Monday, appears to be due in part to a misunderstanding of the regulation. However, the ECB’s pronouncement is not expected to derail the formal adoption of the proposed amendment to the CRD.