Losses incurred by banks when granting loans due to the fact that some loans are not repaid at all or only partially. – Banks attempt to hedge such risks by securitization or by using credit derivatives. Central banks continuously monitor credit defaults because of possible risks to the financial system as a whole. – See default, credit default swap, loan-versus-paper transaction, default, contingent loss, loan, non-performing, credit default swap, credit event, credit card fiasco, credit quality,
credit risk, lending principle, customer, bad, air papers, papers, toxic, PayGreen initiative, reintermediation, risk department. – Cf. ECB Monthly Bulletin, March 2004, pp. 39 ff.
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