As the financial turbulence which started in the summer of 2007 turned from a liquidity crisis into a solvency crisis, CDS markets increasingly raised concerns, for three reasons in particular.
First, regulators are broadly in agreement that, owing to their private nature, CDSs have contributed to the reduced transparency of the credit markets, helping to shift credit exposures in a manner that makes it very difficult to assess how different institutions are interlinked and how much credit risk they actually hold.