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Bridge over ocean
1 September 2009 Financial Analysts Journal Volume 65, Issue 5

Transparency through Financial Claims with “Fingerprints”: A Mechanism for Preventing Financial Crises

  1. Helmut Gründl
  2. Thomas Post

Lack of transparency in securitization transactions contributed significantly to
the current global financial crisis. This article proposes an
incentive-compatible mechanism for future securitization transactions that would
increase transparency: financial claims with “fingerprints.” This
mechanism would allow market participants at each stage of the securitization
process to easily obtain full information about the underlying original risks
and the superior claims that need to be satisfied before receiving their own
payoffs. The mechanism would considerably enhance transparency in securitization
transactions at the expense of some transaction costs.

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