HomeGlossaryCredit derivatives
Credit derivatives
Financial contracts whose payouts depend on borrowers’ default or credit quality—tools for hedging risk that also concentrated and obscured exposure before 2008.
Credit-default swaps and related structures let investors transfer default risk without selling the underlying loan. In calm times they add liquidity; in panics, collateral calls and opaque webs of exposure can amplify stress.
Regulatory lens
Post-crisis reforms expanded reporting, clearing, and capital treatment for derivatives—overlapping the glossary’s banking-regulation and financial-crisis material in the content plan’s future bank_and_finance_entities map.