On the growth of financial services."In 1960, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. accounted for about 3.5 percent of U.S. gross domestic product. By 2006, that percentage had more than doubled." "Securitized securitized Of, related to, or being debt securities that are secured with assets. For example, mortgage purchase bonds are secured by mortgages that have been purchased with the bond issue's proceeds. products are one important area of product and market innovation. Of the $3.6 trillion in net borrowing in U.S. credit markets in 2006, $820 billion, or nearly one-fourth, was securitized. As of year-end 2006, roughly 30 percent of the outstanding balances of corporate bonds and household credit resided in asset-backed securities." "In addition, use of derivative products has soared; the notional amount of interest rate swaps Interest Rate Swap A deal between banks or companies where borrowers switch floating-rate loans for fixed rate loans in another country. These can be either the same or different currencies. and options has tripled in the past four years to nearly $300 trillion. The notional amount of credit default swaps Credit Default Swap A swap designed to transfer the credit exposure of fixed income products between parties. Notes: The buyer of a credit swap receives credit protection, whereas the seller of the swap guarantees the credit worthiness of the product. has almost quintupied in only two years, from $6.4 trillion outstanding in 2004 to $29 trillion in 2006." --Federal Reserve Governor Kevin Warsh on financial intermediation, June 5 |
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