Global Financial Stability Report, April 2006: Market Developments and Issues - Chapter 2: The Influence of Credit Derivative And Structured Credit Markets on Financial Stability

Volume/Issue: Volume 2006 Issue 003
Publication date: May 2006
ISBN: 9781451939194
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Topics covered in this book

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Banks and Banking , Finance , Money and Monetary Policy , GFSR , credit derivative market , market participant , market liquidity , transfer market , cash settlement , CDO tranche market , credit risk transfer market , liquidity vulnerability , risk transfer market , Credit , Credit risk , Liquidity , Hedge funds , Bank credit , Global , Middle East , Europe

Summary

This paper examines the influence of credit derivative and structured credit markets on financial stability. Credit derivative and structured credit markets have grown rapidly in size and complexity in recent years. This paper reviews the growth of the credit derivative, the factors that have influenced their growth, how they have increasingly facilitated risk transfer, and their implications for financial stability. The paper also presents a discussion of policy implications and recommendations concerning these relatively new markets and related challenges.