Template-Type: ReDIF-Article 1.0
Author-Name: Prashant Babu
Author-Name: Michael Chui
Author-Name: Costas Stephanou
Title: The rise and risks of synthetic risk transfers
Abstract: Synthetic risk transfers (SRTs) are used by banks for capital and credit risk management. They have grown significantly in recent years but remain small relative to bank balance sheets. European banks have traditionally dominated SRT issuance, but their North American peers have seen an increase in issuance more recently. SRT-related risks appear to be modest at present. However, this may change as the market expands, structures become more complex and banks rely more heavily on non-bank financial institutions for credit protection. Limited and fragmented information heightens the potential for SRT-related risks to build undetected, highlighting the need for enhanced monitoring of risks for individual banks and from a systemwide perspective.
Journal: BIS Quarterly Review
File-URL: https://www.bis.org/publ/qtrpdf/r_qt2603c.pdf
File-Format: Application/pdf
File-URL: https://www.bis.org/publ/qtrpdf/r_qt2603c.htm
File-Format: text/html
Year: 2026
Month: March
Classification-JEL: G18, G21, G22, G23, G28
Handle: RePEc:bis:bisqtr:2603c