Credit derivatives “enhance the transparency of the markets’ collective view of credit risks.. 1… 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.
- and thus[↩]
