In the fourth quarter of last year, for example, banks charged off $ million of credit losses from derivatives - including options, swaps, futures and forwards - or only 0.04% of their total credit exposure from derivatives.
This in part reflects the fact that in some derivative contracts, most notably in interest rate swaps, there is no principal to be exchanged and thus no principal at risk. In comparison, net charge-offs relative to loans were 0.58% in that quarter - also small but, nonetheless, almost 15 times as much.