Restarting securitisation markets is “critical” to a wider economic recovery, the International Monetary Fund claimed yesterday, as it warned that regulatory proposals might kill the market.

The fund welcomed efforts to tame many of the pre-crisis excesses in securitisation markets, which have been blamed for allowing money to flow to households with little chance of paying it back, but signalled that current proposals were too draconian.

“As these proposals currently stand . . . they may be so blunt that they will either be ineffective at providing incentives for better securitiser behaviour or, alternatively, may further slow the market recovery, effectively closing it under some configurations of portfolio characteristics and economic conditions,” the fund said.