Through securitization and structured finance, more families, individuals, and businesses have access to essential credit, seamlessly and at a lower price.
[2] ISDA conducted market surveys of its Primary Membership to provide a summary of the notional amount outstanding of interest rate, credit, and equity derivatives, until 2010.
Structured finance utilizes securitization to pool assets, creating novel financial instruments to enable better use of available capital or serve as a cheaper source of funding, especially for lower-rated originators Other uses include alternative funding (ture), reducing credit concentration and for risk transfer[3][better source needed] and risk management interest rates and liquidity.
[citation needed] Monoline insurers play a critical role in modern-day Credit Enhancements; they are more effective in (a) off-balance-sheet models creating synthetic collateral, (b) sovereign ratings' enhancement with built-in asset derivatives and (c) cross border loans with receivables and counterparties in the domain and jurisdiction of the monoline insurer.
The decision whether to use a monoline insurer or not often depends upon the cost of such cover vis-a-vis the improvement in pricing for the loan or bond issue by virtue of such credit enhancement.
[citation needed] Ratings play an important role in structured finance for instruments that are meant to be sold to investors.