Experts doubt effectiveness of EU's proposed ban on naked CDS

10/21/2011 | Bloomberg Businessweek · Risk.net (subscription required)

Experts and insiders are questioning whether the EU's efforts to ban naked credit default swaps on sovereign debt will be effective. "Most buyers of sovereign CDS now are genuine holders of government-bond portfolios who are worried about downgrades," said Georg Grodzki, head of credit research at Legal & General Investment Management. "The damage has been done and has become self-perpetuating even without speculative bets."

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