Article

Non-Technical Introduction

Gillian Tett

in The Oxford Handbook of Credit Derivatives

Published in print January 2011 | ISBN: 9780199546787
Published online September 2012 | | DOI: http://dx.doi.org/10.1093/oxfordhb/9780199546787.013.0001

Series: Oxford Handbooks in Finance

 Non-Technical Introduction

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This article discusses the development of the credit derivatives concept and how it became increasingly controversial, especially during the banking crisis of 2007 and 2008. In the fifteen years since the concept was first developed, by groups such as J. P. Morgan, Bankers Trust, Credit Suisse – and others – this product has expanded with dizzying speed. At the start of the decade, official data from ISDA suggested that barely $1 trillion of these contracts had been written in the global markets when measured in terms of gross outstanding amount (i.e., without netting off contracts which offset each other). By 2008, that sum had swelled above $60 trillion. More striking still, the original concept of credit derivatives had mutated into numerous new forms, breeding a host of acronyms along the way covering corporate, sovereign, and mortgage debt.

Keywords: credit derivatives; banking crisis; J. P. Morgan; corporate debt; sovereign debt; mortgage debt

Article.  7568 words. 

Subjects: Economics ; Financial Markets ; Econometric and Statistical Methods and Methodology: General

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