Pope: Financial market ticking time bomb

Paul Franciscus warns that financial markets are exploding.

In those words, the Pope focused his arrows Thursday on the market of credit default swaps.

With this product, an investor can insure itself against the default of others. During the credit crisis, the market gained a large share of global GDP, according to the Franciscus, but is still a huge force that, according to him, can not be sufficiently controlled.

The sale and further resale of the CDS products without regulation has led to a world in which financial markets gamble on the failure of others, which is ethically 'unacceptable', according to the church leader.

Investors hardly learned anything from the 2007 credit crisis when this entire market collapsed. Even today, companies and countries are recovering from the credit crisis.

The pope asks for extra regulations to get this market better under control. The Vatican itself was more likely to fall victim to the greed of one of its bankers, who were condemned

In the Netherlands, the Vereniging van Effectenbezitters (VEB) has long warned against these derivatives. The seller of the swaps promises to compensate losses if a 'credit event' arises, usually a bankruptcy or if another party can not deliver. In return, the buyer pays premiums to the seller periodically.

Billionaire investor Warren Buffett called the derivatives 'weapons of mass destruction for the financial markets'.

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