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Wednesday April 06, 07:30
IMF report warns credit derivative market may decline
(by Dr.Goldfinger)

IMF report warns credit derivative market may decline Credit derivative market may be rapidly sold off under the negative conditions, according to IMF’s Global Financial Stability Report.

The report, mainly aimed at identifying potential weaknesses in the global financial system, showed that the complex securities markets may face tough times if market conditions turn sour.

«The elements of risk management systems designed to deal with these complex products have not been through a live test, particularly to see if in time of need, counterparties stand ready to absorb the additional market and credit risks from those who would like to shed them,» the report said.

The IMF also pointed at the danger for the big banks to lose credits in an attempt to attract more clients.

Credit derivative market is a highly complex financial structure that oversees more than $1 trillion.
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