During a mortgage lending forum yesterday, the U.S. Federal Reserve chairman Ben Bernanke made strong remarks on the weak infrastructure of the OTC derivatives market calling special attention to the fall-out of Bear Stearns.Bernanke is asked participants to improve the efficiency and reliability of the CDS dominated market of derivatives, reports Financial News.
The CDS market, worth $62 trillion, has grown at such a rapid rate, causing concerns of its stability. A CDS contract is supposed to hedge against credit risk, but concerns of an inadequate infrastructure loom.