As I will discuss, I believe these developments generally have enhanced the efficiency and the stability of the credit markets and the broader financial system by making credit markets more transparent and liquid, by creating new instruments for unbundling and managing credit risks, and by dispersing credit risks more broadly.
Interestingly, this is not the first time that we have witnessed innovations in derivatives markets that have led to these types of benefits. Later, I will very briefly draw some parallels between recent developments in credit derivatives and the development of agricultural futures in the mid-nineteenth century. For all their benefits, these developments have posed some significant challenges to market participants.