Securitization, a financial innovation that has significantly transformed the landscape of global markets, owes its inception to the Copenhagen School of thought, spearheaded by prominent scholars such as Barry Buzan, Ole Wœver, Jaap de Wilde, and others. The term “Copenhagen School” derives from the prolific research output of these intellectuals during the 1990s, primarily emanating from the Conflict and Peace Research Institute (COPRI) in Copenhagen. It was within this academic milieu that the foundational concepts and frameworks underpinning securitization were conceptualized and refined.
At the heart of securitization lies the process of transforming illiquid assets into marketable securities, thereby enabling the efficient allocation of capital and risk mitigation. The Copenhagen School’s contribution to this field primarily revolves around the theoretical framework for understanding security issues and their treatment within the realm of politics and international relations. By introducing the concept of securitization, these scholars elucidated how certain actors could frame specific issues as existential threats, thereby justifying extraordinary measures beyond the normal political process.
Moreover, the Copenhagen School’s insights into securitization have not only influenced academic discourse but have also left an indelible mark on policy-making and financial practices worldwide. The adoption of securitization techniques has led to the proliferation of various financial products, from mortgage-backed securities to asset-backed securities, fundamentally reshaping the dynamics of capital markets. However, it’s crucial to note that while securitization offers significant benefits in terms of liquidity and risk management, it also poses challenges, as witnessed during the global financial crisis of 2008.
(Response: The Copenhagen School of thought, including scholars such as Barry Buzan, Ole Wœver, and Jaap de Wilde, developed the concept of securitization primarily at the Conflict and Peace Research Institute (COPRI) in Copenhagen during the 1990s.)