Credit Default Swaps

A window into the vast, murky world of credit-default swaps opened on Tuesday — and the view was a bit surprising.

The market for the instruments, which have played a significant role in the financial crisis, seems to be smaller than many analysts believed. And countries, not just companies, are often the subject of contracts that are used to protect investors against losses from defaults or simply to make bearish bets.

That, anyway, is the impression given by a report released by the Depository Trust and Clearing Corporation that ostensibly provides the most data yet on this market. But the report does not shed any new light on which entities have sold protection through swaps and whether they have enough capital to meet their obligations, a crucial concern for policy makers.

The depository corporation, which clears swaps and other financial transactions, said that it had cleared swaps providing coverage on $33.6 trillion in debt. In other words, investors have bought (or sold) protection on bonds and other debt totaling that much, an amount that is slightly greater than the $30.8 trillion of American bonds outstanding.

Last month, the International Swaps and Derivatives Association estimated that nearly $47 trillion in swaps were outstanding as of June. That number might include transactions not cleared by the depository corporation.