FSF warns of weak credit risk management

After a two-day meeting in Sydney, the Financial Stability Forum has warned that the credit derivatives industry is still poorly prepared for a crisis, although the financial industry as a whole remains strong.

The forum, representing regulators and central banks from around the world, said that "market and macroeconomic conditions remain benign" and financial markets had become more resilient.

However, members warned that the system could come under strain from high household indebtedness, external imbalances or an excess of liquidity leading to low risk premiums.

In particular, counterparty risk management was highlighted as a problem - firms were urged to speed up their work on operational risk and "issues of transparency with regard to credit derivatives". The forum also warned financial authorities to prepare for the impact of an outbreak of avian flu.

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here