We discuss how market derivatives help institutions reduce risk and protect against market volatility, allowing for more efficient operations. These contracts are mostly traded privately, with an estimated total value of 700 trillion globally, far exceeding the global GDP. However, the vast scale of these derivatives poses a potential threat to global financial stability, often viewed as a ticking time bomb, with the risk of causing significant disruption if the market destabilizes. American billionaire Warren Buffett has even described such contracts as Weapons of Mass Financial Destruction.
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