CREDIT DEFAULT SWAPS – WEAPON OF MASS DESTRUCTION OR RELIABLE INDICATOR?
Article first published online: 2 FEB 2012
© 2012 The Author. Economic Affairs © 2012 Institute of Economic Affairs. Published by Blackwell Publishing, Oxford
Volume 32, Issue 1, pages 72–74, February 2012
How to Cite
Klieber, D. S. (2012), CREDIT DEFAULT SWAPS – WEAPON OF MASS DESTRUCTION OR RELIABLE INDICATOR?. Economic Affairs, 32: 72–74. doi: 10.1111/j.1468-0270.2011.02133.x
- Issue published online: 2 FEB 2012
- Article first published online: 2 FEB 2012
- credit default swaps;
- ratings agencies;
- over-the-counter trading;
Credit Default Swaps (CDS) are said to increase systemic vulnerability, but they also serve as an ex-ante indicator of default probabilities, more finely-tuned and more responsive than ratings agency reports. And they provide a useful mechanism for trading risk and an incentive for good management by businesses and governments.