While available data cannot resolve these issues, a study conducted last year by the Joint Forum, which was based on interviews with market participants, does shed some light.3 The study concluded that notional values had significantly overstated the amount of credit risk that had been transferred outside the banking system to that point and that the amount of risk transfer was quite modest relative to the total amount of credit risk that exists in the financial system.
The study found no evidence of "hidden concentrations" of credit risk. Risk-takers outside the banking system included monoline insurers and other insurance companies; private asset managers acting on behalf of pension funds, mutual funds, and other institutional investors; and hedge funds.