Fed's Kohn on financial stability & policy issues

In the speech 'Financial stability and policy issues' given on 16 May Donald Kohn of the Federal Reserve said the explosive growth of the credit derivatives market has helped spread risks, but also created new channels to transmit shocks to the economy.

"We have seen some indications of this in the recent experience in the subprime mortgage market," Kohn told a conference on credit derivatives hosted by the Atlanta Federal Reserve.

"Thus far the dramatic widening of spreads on the riskier tranches

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