Why China’s latest ‘financial innovation’ might not work

Business & Technology

Although credit-default swaps "provide lenders with a tool to hedge their credit exposures by purchasing CDS protection, it is unclear who will be the seller of the protection, and if the sellers are other financial institutions, the credit risks are merely transferred to other parts of the financial sector," notes Goldman Sachs analyst Kenneth Ho.

Sky Canaves
Credit: BEIJING, CHINA - JANUARY 04: People walk in the smog on January 4, 2017 in Beijing, China. The Central Meteorological Observatory issued a orange alert of smog in Beijing, Hebei, Henan, Shanxi, Shaanxi and some other regions in China on Thursday morning. (Photo by Hao Yi/Beijing Youth Daily/VCG via Getty Images)

Sky Canaves previously reported for The Wall Street Journal in Beijing and Hong Kong, where she covered media, culture, social issues, and legal affairs, and served as the founding editor and lead writer of the WSJ’s China Real Time site. Prior to becoming a journalist, Sky worked in the China corporate law practice of Baker & McKenzie, and she has also taught journalism and media law at the University of Hong Kong. She speaks Mandarin and has accumulated more than a decade’s experience living, studying and working in China. Read more

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