Working Paper

Understanding credit derivatives and their potential to synthesize riskless assets


Abstract: The credit derivatives market is emerging as a potentially important new development that may help shape the overall financial markets in the years to come. In this paper, I provide a brief overview of the credit derivatives market and assess its future potential in the creation of private-sector instruments that are virtually free of default risk, and, thus, may be appealing to investors who currently favor the safety of U.S. Treasury securities.

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Bibliographic Information

Provider: Board of Governors of the Federal Reserve System (U.S.)

Part of Series: Finance and Economics Discussion Series

Publication Date: 2001

Number: 2001-50