FRB: Speech, Greenspan--Risk Transfer and Financial Stability--May 5, 2005

Greenspan spoke today on derivatives. Really interesting, but alas I am making out finals and have no time to comment.

So in his words, the SUPER short version:
FRB: Speech, Greenspan--Risk Transfer and Financial Stability--May 5, 2005: "Perhaps the clearest evidence of the perceived benefits that derivatives have provided is their continued spectacular growth. As a consequence of the increasing demand for these products, the size of the global OTC derivatives markets, according to the Bank for International Settlements (BIS), reached a notional principal value of $220 trillion in June 2004. Indeed, the growth rate of the OTC markets was more rapid in 2001-04 than over the previous three years. At the same time, the growth rate of exchange-traded derivatives exceeded the growth rate of OTC derivatives over 2001-04. Throughout the 1990s, the Chicago futures and options exchanges debated whether the growth of the OTC markets was good or bad for their markets. The data seem to have resolved that debate"