CDS could provide an avenue for participants to mitigate credit risk and enable effective redistribution of credit risk within the system. With the necessary infrastructure that included trade repository, documentation, publication of CDS curve for valuation, standardisation of contracts, etc. in place, participants were permitted to enter into CDS with effect from December 1, 2011.
Here we must aim right at the heart of the problem, namely, the paperwork which the complex requirements create in various areas. Some of these requirements could be completely eliminated for institutions in the Small Banking Box. I could, for instance, imagine largely exempting small banks from disclosure requirements and abolishing remuneration rules for them.