Enria said the CDS market is relatively small and illiquid, but that a selloff there could have broader ramifications for the much larger share market. He called for CDS, a form of insurance for bondholders, to be centrally cleared.
"What concerned me really was the amount of nervousness, disquiet that I perceived in the market and among investors," Enria told a conference in Frankfurt.
"There are markets like the single-name CDS market which are very opaque, very shallow and very illiquid, and with a few million (euros) the fear spreads to the trillion-euro-assets banks and contaminates stock prices and also deposit outflows."
Prices for Deutsche Bank's credit default swaps , have eased since Friday but remain far above levels preceding the collapse of Silicon Valley Bank and the sale of Credit Suisse, the catalysts for the recent turmoil across the banking sector.
Enria argued that central clearing for credit default swaps
would improve transparency, reducing the risk of volatility.
"Having these type of markets centrally cleared rather than
having OTC, opaque transactions ... would already be a big
progress," he said.
(Reporting By Francesco Canepa; editing by Balazs Koranyi and
Catherine Evans)
