Credit Default Swaps: Frequently Asked Questions

Description:

Credit default swaps are contracts that provide protection against default by third parties, similar to insurance. These financial derivatives are used by banks and other financial institutions to manage risk. The rapid growth of the derivatives market, the potential for widespread credit defaults (such as defaults for subprime mortgages), and operational problems in the over-the-counter (OTC) market where credit default swaps are traded, have led some policymakers to inquire if credit default swaps are a danger
to the financial system and the economy. This report defines credit default swaps, explains their use by banks for risk management, and discusses the potential for systemic risk.

Creator(s):
Creation Date: July 30, 2008
Partner(s):
UNT Libraries Government Documents Department
Collection(s):
Congressional Research Service Reports
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Place of Publication: Washington, D.C.
Date(s):
  • Creation: July 30, 2008
  • : August 12, 2008
Description:

Credit default swaps are contracts that provide protection against default by third parties, similar to insurance. These financial derivatives are used by banks and other financial institutions to manage risk. The rapid growth of the derivatives market, the potential for widespread credit defaults (such as defaults for subprime mortgages), and operational problems in the over-the-counter (OTC) market where credit default swaps are traded, have led some policymakers to inquire if credit default swaps are a danger
to the financial system and the economy. This report defines credit default swaps, explains their use by banks for risk management, and discusses the potential for systemic risk.

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Partner:
UNT Libraries Government Documents Department
Collection:
Congressional Research Service Reports
Identifier:
Resource Type: Report
Format: Text