BIS Review 90/2006  3  There are some uncertainties associated with the settling of trades in newer types of over-the-counter (OTC) derivatives, particularly credit derivatives. As part of recent financial innovations, the creditderivative and structured-credit markets have grown rapidly during the past few years, allowing dispersion of credit risk by financial players.
The risk premium - and not expected inflation - could account for part of the difference between the real yield on the inflation-linked bond and the nominal yield on a conventional bond of the same maturity. It might be difficult to distinguish between the expected inflation component and the risk premium element.