Should credit default swap issuers be subject to prudential regulation?

Saunders, Benajmin B. 2010, Should credit default swap issuers be subject to prudential regulation?, Journal of corporate law studies, vol. 10, no. 2, pp. 427-450, doi: 10.5235/147359710793129390.

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Title Should credit default swap issuers be subject to prudential regulation?
Author(s) Saunders, Benajmin B.ORCID iD for Saunders, Benajmin B.
Journal name Journal of corporate law studies
Volume number 10
Issue number 2
Start page 427
End page 450
Total pages 24
Publisher Routledge
Place of publication Abingdon, Eng.
Publication date 2010
ISSN 1473-5970
Summary Credit default swaps (CDSs) contributed significantly to and exacerbated the recent global financial crisis. As a result of the major role that CDSs played, this paper argues that CDS issuers should be subject to prudential regulation, in order to improve systemic stability in the financial system. Three reasons are put forward for this proposition. First, CDSs are functionally equivalent to insurance and so should be regulated in a consistent manner. Secondly, CDSs perform the economic function of assuming credit risk, and so should be prudentially regulated in the same way as other financial institutions which assume credit risk. Finally, CDSs have the potential to contribute to systemic instability in the financial system, and prudential regulation would reduce this risk.
Language eng
DOI 10.5235/147359710793129390
Field of Research 180109 Corporations and Associations Law
1801 Law
Socio Economic Objective 940405 Law Reform
HERDC Research category C1.1 Refereed article in a scholarly journal
ERA Research output type C Journal article
Copyright notice ©2010, Routledge
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Document type: Journal Article
Collections: Faculty of Business and Law
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