Credit Default Swaps: Frequently Asked Questions

Murphy, Edward Vincent

Library of Congress. Congressional Research Service.

关键词: Consumers;    Finance;    Credit insurance;    Derivative securities;    Banks and banking;   

RP-ID  :  RS22932
RP-ID  :  RS22932_2008Jul30

美国|英语

来源: UNT Digital Library

【 摘 要 】

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 dangerto 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.