Repricing the loan market
One of the idiosyncrasies of financial derivatives is that they can grow to eclipse the underlying market on which they are based. This is certainly the case with credit default swaps. With $34.5 trillion in notional outstanding volumes at the end of 2006, the CDS market now dwarfs the cash bond market. An extension of this trend is that the CDS market has started to drive developments in the cash bond market, rather than taking its cue from them: for example, by forcing a change in the way
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