Top banks are poised to embark on ground-breaking discussions to decide a new framework for trading covered bonds in Europe after market turmoil caused a significant disruption to dealings in what is considered one of the safest forms of debt.

The discussions by the group – set up by the European Covered Bond Council – come as some financiers expect a substantial increase in covered bond issuance from banks in the coming months, since these are now less able to fund their lending from other sources.