The International Monetary Fund says there is no empirical evidence to support the EU's ban on naked sovereign credit default swaps and that the move could actually increase financial-market instability. "The recent European ban on purchasing naked SCDS protection appears to move in the wrong direction," according to the IMF. "While the effects of the ban are hard to distinguish from the influence of other policy announcements, the prohibition may have already caused some impairment of market liquidity."

Related Summaries