No silver bullet

The emergence of contingent credit default swaps has presented banks with a new way to manage their counterparty credit exposures. However, they have important limitations, argues David Rowe

In one way or another, I have been involved with counterparty credit exposure management for more than 15 years. During most of that period, you could not buy credit protection for the uncertain exposure implicit in a reference swap to a third party. Credit derivatives desks had no way to deal with that type of trade. The irony, however, was that the third party could call the swaps desk across