There is a public belief that commercial banks are creating OTC derivative products ________.

Question

Quizplus · Accepted Answer

The public belief is that commercial banks are creating OTC derivative products that could have a rippling effect on the U.S. financial system. There is concern that these products could cause a domino effect if one major institution were to fail, leading to systemic risk. While some banks may have risk-management systems in place, the belief is that the potential consequences of these derivatives outweigh the benefits. There is also concern that banks may create these products to generate profits, putting them in a position that could result in favorable financial problems.

There Is a Public Belief That Commercial Banks Are Creating