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Friday, 30 December 2011

Financial risk continues to grow astronomically

"Banks globally sold $707.6 trillion of over-the-counter derivatives as of June 30 [2011], about 18 percent more than the $601 trillion at the end of 2010, according to data published by the Bank for International Settlements last month."

This is imprudent and adds to global financial and economic systemic risk, given that the 2008 proposed solution to the global financial crisis (GFC) was to limit the use of over-the-counter (OTC) derivatives, and instead to encourage derivatives to be traded transparently through public clearing houses.  Instead, creation of OTC derivatives appears to be soaring, and accelerating.  Regulatory failure is glaring;  oversight apparently absent.  See Bloomberg's report here.

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