But it would be a mistake to think that there is a big dividend waiting to be reaped here. Whether the lags in recognition and implementation are so long as to make the operation of monetary policy perverse in relation to the business cycle is something that can be established only empirically. Like most empirical matters, there is room for considerable difference of opinion.
Obviously, this market is still too new to have been tested in a widespread down-cycle for credit, but, to date, it appears to have functioned well. The market for credit derivatives has grown in prominence not only because of its ability to disperse risk but also because of the information it contributes to enhanced risk management by banks and other financial intermediaries.