Abstract
The paper reviews another type of credit derivatives. There are several advantages of credit default swaps (CDS), such as a transfer of an illiquid position, better credit risk management and possible participation in credit risk arbitrage etc.
On the other hand, several disadvantages exist such as contribution to moral hazard and instability in the financial system and to higher systemic risk, a large concentration of CDS trading at a few market players. All these issues are discussed in the paper, inclusing a detailed introduction of the asset class.