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 ... continued below

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Murphy, Edward Vincent July 30, 2008.

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This report is part of the collection entitled: Congressional Research Service Reports and was provided by UNT Libraries Government Documents Department to Digital Library, a digital repository hosted by the UNT Libraries. It has been viewed 471 times . More information about this report can be viewed below.

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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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Congressional Research Service Reports

The Congressional Research Service (CRS) is the public policy research arm of Congress. This legislative branch agency works exclusively for Members of Congress, their committees and their staff. This collection includes CRS reports from the mid-1970's through the present--covering a variety of topics from agriculture to foreign policy to welfare.

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  • July 30, 2008

Added to The UNT Digital Library

  • Dec. 11, 2008, 8:32 p.m.

Description Last Updated

  • Feb. 9, 2017, 8:29 p.m.

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Murphy, Edward Vincent. Credit Default Swaps: Frequently Asked Questions, report, July 30, 2008; Washington D.C.. (digital.library.unt.edu/ark:/67531/metacrs10780/: accessed December 16, 2017), University of North Texas Libraries, Digital Library, digital.library.unt.edu; crediting UNT Libraries Government Documents Department.