Law-Based Commodiﬁcation of Private Debt
Abstract: This article looks back in history to understand how private debt developed into
the kind of tradableasset, or commodity, that it is today. Thearticle theorises that develop-
ment, distinguishing in it three discrete but overlapping modes of commodiﬁcation, namely
propertiﬁcation, impe rsonalisation and risk abs traction. The three modes sh ed light on
changes in debtas a legal institution and in the economicand social functions of debt. Finally,
the article shows that commodiﬁcation of private debt is not just a phenomenon of the past,
but something to be taken int o account in future law-m aking, where the three modes of
commodiﬁcationmay help to recognise particular opportunities and risks. This is illustrated
by two actions included in the Commission’s Capital Markets Union project, one regarding
cross-border assignments of claims, the other the European securitisation market.
For contemporarymarket economies, debt is a tradable asset,something capable of being
bought and soldin different forms. In effect, debt has becomea commodity. For proof, one
only needs to think of the prevalence of ﬁnancing techniques based on assignment of re-
ceivables (i.e.rights to payment of a monetary sum, a subset of ‘claims’), such as factoring
A closely related matter is that debt is generally regarded as a type of
In notions of debt as a commodity or property, debt is viewed from
the creditor side, as receivables or claims.
The notion of debt as a commodity is essential background to several other themes in
this special issue. Today’s networks of debt could not have developed without extensive
* Postdoctoralresearcherat the Universityof Helsinki, Facultyof Law. Availabilityof web referenceschecked on
1 December2016. I thank Dr OrkunAkseli for helpful commentson the ﬁrst draft ofthis article, and Professor
Agustín José Menéndez for thorough review. The article is a product of the project ‘European Bonds: The
Moral Economyof Debt’, funded by the Academyof Finland and the University of Helsinki.
Factoring generally means conversion of trade receivables(‘invoices’) into cash by selling them to a ﬁnance
company,called a ‘factor’. Securitisationinvolvespooling together of receivablesfrom mortgagesor other loans
and reﬁnancingthat pool, usuallyby selling it to a speciallyestablished companyor other entity, calleda ‘special
purpose vehicle’or ‘SPV’, whichﬁnances the purchase by issuing debt securities backed by the pool (i.e. the
income stream generated by the rec eivables), to be bought by invest ors in capital markets. See United
Nations Commission on International Trade Law, UNCITRAL Legislative Guide on Secured Transactions
(United Nations, 2010), Introduction, at paras. 31–37, available at http://www.uncitral.org/pdf/english/
texts/security-lg/e/09-8 2670_Ebook-Guide_09-04-10English.pdf. The concept of assign ment may cover,
besides outright transfers of claims, transfers of claims by way of security, and (other) security rights over
claims.See Article 14 para.3 of Regulation (EC) No.593/2008 of the EuropeanParliament andof the Council
of 17 June 2008on the law applicable to contractual obligations (Rome I), OJ L177, 4.7.2008, 6–16.
See C. Lebon,‘Property Rights in Respectof Claims’, in S. (J.H.M.) vanErp and B. Akkermans (eds.),Cases,
Materials and Text on National, Su pranational and International Pr operty Law (Hart Publishing, 201 2),
365–423; A. Flessnerand H. Verhagen,As signment inEu ropean Private International Law: Claims as Property
and the EuropeanCommission’s‘Rome I Proposal’(SellierEuropean Law Publishers, 2006),at 2–7.
European LawJournal, Vol. 22, No. 6, November 2016, pp.743–757.
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