Official: CDS didn’t cause Greek tragedy

Official: CDS didn’t cause Greek tragedy

first_img whatsapp whatsapp KCS-content Tags: NULL AN EU investigation revealed yesterday that trading in sovereign credit default swaps did not cause a spike in borrowing costs for states such as Greece this year.The report, commissioned by EU finance ministers in March, found “no conclusive evidence” that developments in the CDS market affected the cost of state borrowing.It praised the “efficiency of CDS markets in sovereign debt” and said they had little influence on bond yields even where governments faced funding difficulties.“CDS spreads for the more troubled countries seem to be low relative to the corresponding bond yield spreads, which implies that CDS spreads can hardly be considered to cause high bond yields for these countries,” the report said.It follows tough new European Commission proposals published in September that aim to tighten rules on short selling and restrict trading of CDS on sovereign debt, where investors effectively take a short position on EU government bonds.But a UK member of the European Parliament, Syed Kamall, lashed out at the draft legislation.“The paper says that restrictions on credit default swaps of sovereign bonds is bad policy. Yet this is exactly what the Commission regulation is pushing for,” he said.The Conservative MEP, said a crackdown on sovereign CDS could push up yields on government borrowing.“With rapidly rising bond yields in Ireland, Portugal, Spain and Italy, we certainly should not be adopting policies that could make these yields rise further,” he said.The report concluded that CDS trading even helped lower the cost of funding sovereign deficits, as by insuring the debt they enabled institutional investors to take on more and kept yields for troubled countries “lower than otherwise would be possible,” it said. Tuesday 7 December 2010 9:04 pmcenter_img Share by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeMisterStoryWoman Files For Divorce After Seeing This Photo – Can You See Why?MisterStoryTotal PastThe Ingenious Reason There Are No Mosquitoes At Disney WorldTotal PastMoneyPailShe Was Famous, Now She Works In {State}MoneyPailSerendipity TimesInside Coco Chanel’s Eerily Abandoned Mansion Frozen In TimeSerendipity TimesBetterBe20 Stunning Female AthletesBetterBeMagellan TimesThis Is Why The Roy Rogers Museum Has Been Closed For GoodMagellan TimesElite HeraldExperts Discover Girl Born From Two Different SpeciesElite Heraldmoneycougar.comThis Proves The Osmonds Weren’t So Innocentmoneycougar.comAlphaCute30 Rules That All “Hells Angels” Have To FollowAlphaCute Show Comments ▼ More From Our Partners Russell Wilson, AOC among many voicing support for Naomi Osakacbsnews.comKiller drone ‘hunted down a human target’ without being told tonypost.comPolice Capture Elusive Tiger Poacher After 20 Years of Pursuing the Huntergoodnewsnetwork.orgA ProPublica investigation has caused outrage in the U.S. this weekvaluewalk.comNative American Tribe Gets Back Sacred Island Taken 160 Years Agogoodnewsnetwork.orgInside Ashton Kutcher and Mila Kunis’ not-so-average farmhouse estatenypost.comBrave 7-Year-old Boy Swims an Hour to Rescue His Dad and Little Sistergoodnewsnetwork.org980-foot skyscraper sways in China, prompting panic and evacuationsnypost.comAstounding Fossil Discovery in California After Man Looks Closelygoodnewsnetwork.org Official: CDS didn’t cause Greek tragedy last_img

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