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Volume 472: debated on Monday 25 February 2008

To ask the Chancellor of the Exchequer what information his Department holds on the (a) size and (b) recent trends in growth of the (i) global and (ii) domestic credit default swap market. (187813)

There are many statistical sources that provide estimates of the size of the global credit default swap market. Two such resources are the Bank for International Settlements (BIS) and the International Swaps and Derivatives Association (ISDA).

The latest BIS survey published in November 2007 reported the notional amount of outstanding over the counter credit default swaps to be $42.6 trillion in June 2007, up from $28.9 trillion in December 2006 ($13.9 trillion in December 2005).

ISDA reported that the notional amount outstanding of credit derivatives grew by 32 per cent. in the first six months of 2007 to $45.46 trillion from $34.42 trillion. They also reported that the annual growth rate for credit derivatives is 75 per cent. from $26.0 trillion at mid-year 2006.

To ask the Chancellor of the Exchequer whether (a) his Department, (b) the Bank of England and (c) the Financial Services Authority have conducted an analysis of the effect on UK financial stability of the growth of the credit default swap market. (187814)

Both the Bank of England and the Financial Services Authority routinely analyse developments in the credit default swap market, drawing on their relationships with firms, trade associations and international counterparts. These assessments are shared with HM Treasury through the Tripartite Standing Committee on Financial Stability. The Bank of England publish their analysis in their Quarterly Bulletin and Financial Stability Report.