Risks
Risks involving credit derivatives are a concern among regulators of financial markets. The US Federal Reserve issued several statements in the Fall of 2005 about these risks, and highlighted the growing backlog of confirmations for credit derivatives trades. These backlogs pose risks to the market (both in theory and in all likelihood), and they exacerbate other risks in the financial system. One challenge in regulating these and other derivatives is that the people who know most about them also typically have a vested incentive in encouraging their growth and lack of regulation. Incentive may be indirect, e.g., academics have not only consulting incentives, but also incentives in keeping open doors for research.
Read more about this topic: Credit Derivative
Famous quotes containing the word risks:
“In America any boy may become President, and I suppose it’s just one of the risks he takes!”
—Adlai Stevenson (1900–1965)
“The question is whether personal freedom is worth the terrible effort, the never-lifted burden and risks of self-reliance.”
—Rose Wilder Lane (1886–1968)
“There are risks which are not acceptable: the destruction of humanity is one of them.”
—Friedrich Dürrenmatt (1921–1990)