INTEREST RATE SWAPS AND FINANCIAL INSTITUTIONS

INTEREST RATE SWAPS AND FINANCIAL INSTITUTIONS
INTRODUCTION
Interest rate swap transactions began in 1981, with Eurobonds being the principal security employed in these transactions. In a span of only seven years, interest rate swaps have developed into a fully operative market with an annual volume estimated to be over $300 billion and outstanding swaps
with a value over $1 trillion. Although swaps were originally devised to deal with interest rate volatility, a wide variety of new uses has evolved for this unique instrument. This paper will explore many of these new and innovative uses of swaps. Any instrument undergoing the rapid growth that swaps have experienced will encounter critics. In particular, some financial commentators fear that the rapid and uncontrolled growth of this market will pose serious problems for the financial security of the credit markets. Swaps are criticized for masking an institution's true interest......

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Title: Interest Rate Swap
Approximate Word Count: 4437
Approximate Pages: 18 (250 words per double-spaced page)

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