As most of you know, credit default swaps involve the sale, or transfer, of credit risk associated with a specific reference entity for a fixed term in exchange for a fee from the other counterparty (the “protection buyer”).
Secondly, the restructuring of the banking systems in a number of the affected countries will take some time before normality will be restored. As is known, the Japanese Government has just recently provided an amount of more than Yen 60 trillion to recapitalise the  BIS Review 89/1998  -4-  Japanese banking system.