The Pros and Cons of Credit Default Swaps

4 pages | 880 words

This essay examines the role that credit default swaps (CDS) played in the global financial crisis of 2008-2009. It discusses the benefits and risks associated with the use of CDS, and it concludes that while they can be useful hedging tools, they can also be used to speculate on events and exacerbate losses in the event of a default or restructuring.