Credit Derivatives

"I deliberately made it simple because, for all of the simplicity of this concept, it is violated time and again in the financial markets."

"The structure is flexible and does not require a sale of the asset. In this way the investor can lock in a return, yet take a temporary short-term negative view on an asset."

"The borrower need never know that the bank is laying off its risk, and the bank can continue to have a profitable relationship with the borrower."

"Credit derivatives are sometimes seen as the panacea, the answer to any finance problem that cannot be solved by conventional market strategies."

"To avoid confusion it is best to immediately reiterate the terms of the transaction. I know several seasoned market professionals who have run into difficulty as a result of not clarifying terminology."

"The protection buyer may be looking for a cheap source of credit default protection."

"The harder a government, such as a dictatorship, tries to maintain monetary policy autonomy, the more it must either limit the movement of capital into and outside of the country, or the more it must compromise exchange-rate stability."

"This allows investors to take either a bullish or bearish view on a basket of emerging market countries or on a selected set of countries."

"The current dogma on regulatory treatment gives market professionals an uneasy feeling."

"The potential for negative publicity and minor shakeups in this market abound. Some market participants will get their education the hard way. It is an inevitable part of the product life cycle."