Covered bond swaps carve-out confusion

Earlier this month the Bank for International Settlements (BIS) released a document suggesting that covered bonds would not be excluded from two way swap agreements. The policy document was completely at odds with earlier regulation from Europe’s Market Infrastructure Regulator (EMIR) and the European Banking Authority, which allow one way covered bond swap agreements. The different outcomes suggest that, unless a global consensus is reached, the swap carve-out may only apply to European covered bonds, bankers told The Cover on Tuesday.