11/9/2010

European regulators have claimed that a few financial institutions used credit default swaps to speculate on the sovereign-bond market, causing instability in peripheral nations. Columnist Simon Boughey argues that rather than a hard-line approach from regulators, the CDS market needs more liquidity. Regulators have backed off, taking a less hawkish approach with sovereign CDS in recent months. However, with the cost of insuring Ireland's debt against default reaching a record high last week, the focus could shift back to the market.

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