Bloomberg View: Credit-Default Swaps Work (See Greece); Eyes in the Sky vs. Privacy

The Greek Default Happened—and All Is Well ● Eyes in the Sky
Illustration by Bloomberg View

How Credit-Default Swaps Worked, and Can Still Improve

As it wrestled with Greece’s debt crisis for the past two years, the European Central Bank took pains to avoid triggering credit-default swaps written on Greek bonds. But on March 9, Greece forced payouts on swaps contracts when it required all private bondholders to forgive more than €100 billion ($130 million) of debt as part of the biggest sovereign-debt restructuring in history. The International Swaps & Derivatives Association, a trade group of large financial institutions, calls Greece’s debt deal a “credit event.” The rest of the world calls it what it is: a default.

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