Credit derivatives “enhance the transparency of the markets’ collective view of credit risks.. [and thus]… provide valuable information about broad credit conditions and increasingly set the marginal rice of credit. Therefore, such activity improves market discipline”

“There is a growing recognition that the dispersion of credit risk by banks to a broader and more diverse group of investors has helped make the banking and overall financial system more resilient …
The improved resilience may be seen in fewer bank failures and more consistent credit provision”.

IMF, Global Financial Stability Review, April 2006, HT Lord Turner.