Mathieu Gex , Virginie Coudert, 13 October 2008

Credit default swaps (CDSs) – bilateral insurance contracts against bond default – are now in the eye of the storm. Worries about counterparty risk are mounting among market players and is multiplied by the lack of global netting. This column discusses lessons from the 2005 crisis in CDSs.

Ángel Ubide, 10 October 2008

Policy has been reactive and reluctant, and politics have trumped efficiency and common sense. There are three steps that must be applied quickly and decisively: close the bad or small banks; recapitalize the good or too big to fail banks; and remove the bad assets from the system so that banks can return to lending.

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