Arising from financial institutions' need to hedge and diversify credit risk, credit derivatives have now become a major investment tool. Almost all credit derivatives take the form of the credit default swap, which transfers default risk from one party to another. Most credit default swaps were...

The striking growth of credit derivatives suggests that market participants find them to be useful tools for risk management. This paper illustrates credit derivatives' value with three examples: a commercial bank using credit derivatives to manage loan portfolio risk; an investment bank using...

This paper explores some bigger-picture risks associated with credit derivatives. Drawing a distinction between the market's perception of credit and "real credit" as reflected in the formal definition of a credit event, the author examines the well-documented macro drivers of credit generally....

This interview, conducted shortly after the Atlanta Fed's 2007 Financial Markets Conference, discusses credit derivatives and their importance to the market and outlines key themes of the conference.