ECB's Draghi takes swipe at Bank of England's handling of Libor Scandal

According to a Telegraph report, the ECB's president Mario Draghi

took a swipe at the Bank of England's handling of the Barclays Libor scandal, which saw the lender fined by regulators after it was found to have manipulated the key lending rate. 

Mr Draghi said that a "lot of action should be taken to improve governance of the Libor process", before adding with a smile: "I dont know what the ECB would have done but I hope we would have done better."

This is a very interesting comment based on how the ECB has addressed the issue of asset level disclosure for structured finance securities.

Regular readers know that once-per-month disclosure is the current standard for opaque, toxic structured finance securities.

Why are these securities opaque?

Because market participants do not know how the assets backing the securities are currently performing.  Once--per-month or less frequent disclosure is like trying to value the contents of a brown paper bag.

What does it take to make these securities transparent?

To make structured finance securities transparent requires providing disclosure on an observable event basis.  Every time there is an activity, like a payment or default, involving the underlying collateral, it needs to be disclosed before the beginning of the next business day.

It is only with this type of disclosure that market participants know the current status of the underlying collateral.  With observable event based reporting, market participants are valuing the contents of a clear plastic bag.

The choice the ECB faced for structured finance security disclosure came down to "Paper or Plastic?"

The ECB explicitly endorsed "paper".

Will the BoE do better and explicitly endorse "plastic"?