Jean-Claude Trichet, president of the European Central Bank, on Friday called for tougher regulation and oversight of the credit default swap market.
It was important that ??certain financial instruments, which were introduced in consideration of their positive effects for the hedging of risks, should not be misused in a speculative manner?, he told a Brussels-based conference on bank crisis management.
??I share the consensus at global level that regulators should be equipped with appropriate tools to be able to investigate and act in an effective and co-ordinated manner. We need more transparency in CDS markets and so do investors,? he said.
Mr Trichet added that a ??key priority? should be more use of centralised clearing facilities, which would help provide more transparency in the CDS market and reduce the incentive to take ??excessive risks?.
