Banque de France: CDS mismanagement rather than naked shorting caused market downfall
A Banque de France study on credit default swap (CDS) markets, published in its July 2010 Financial Stability Review, says the products are essential for managing risks effectively and could be improved through a centralised clearing system.
The author, Rama Cont, notes that CDSs, initially intended as instruments for hedging and managing credit risk, have been pinpointed during the recent crisis as being detrimental to financial stability. However, Cont argues, the impact of CDS markets on
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