EU ban on credit default swaps courageous

The EU has introduced a general ban on naked credit default swaps in a bid to hinder speculation on state bankruptcies. Brussels deserves high praise for having the courage to take such a sorely needed measure, writes Jean Quatremer in his blog Coulisses de Bruxelles: "The markets went too far in speculating against states, and this evening the EU decided to trim their claws. The European parliament has actually managed to convince the states of the merits of its proposal to ban the sale of naked credit default swaps on state bonds. These swaps are one of speculators' most popular instruments, and played a pivotal role in destabilising Greece at the start of 2010. ... The new regulation deserves heartfelt applause, and shows that we are going in the right direction. One can only hope that US lawmakers will follow suit. But whatever the case, European financial regulation has made veritable progress in the last two years, even if there's still much to do."

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