Securitization and financialization

Abstract

Securitization and financialization are the main causes of the financial crisis. These two concepts explain not only Minsky's financial instability hypothesis but also the off-balance-sheet operations represented by derivative products, which are closely related to mortgage loans. Financial intermediaries in need of liquidity did everything in their power so that the securitization of assets could have a life of its own in financial operations. This is a process that is endogenous to the development of financialization. Because said process was a violation of the monetary economy, it was necessary for central banks to intervene as "lenders of last resort" as well as to nationalize and restructure all the financial intermediaries.

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