The Greek Crisis: Eurozone crisis piles pressure on credit default swaps

NOVEMBER 6, 2011

Eurozone crisis piles pressure on credit default swaps

by Tracy Alloway

Financial Times

November 6, 2011

Credit default swaps – the insurance-like derivatives instruments once labelled “financial weapons of mass destruction” – are now themselves under attack.

Vilified by regulators after the financial crisis, the $26,000bn market is already slowly being moved towards central clearing, which will see the CDS more tightly controlled. At the same time, however, the swaps have come under renewed pressure in Europe, where politicians say they have contributed to the region’s dramatic debt crisis.

These new developments have left many users of CDS scratching their heads.

“We need clarity from European leaders and regulators on the CDS market before it freezes,” says Simon Thorp, chief investment officer of fixed income at Avoca Capital. “At the moment huge questions remain.”

via The Greek Crisis: Eurozone crisis piles pressure on credit default swaps.

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For nation shall rise against nation, and kingdom against kingdom: and there shall be famines, and pestilences, and earthquakes, in divers places.
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