Credit default swap spreads have become critical benchmarks for credit risk assessment. A recent report from the European Systemic Risk Board, however, uncovers a range of imperfections in the credit default swap market that can affect its functioning under financial stress by increasing systemic risks through price-related impacts on funding costs. This column summarises the findings of the report, which also puts forward a set of policy proposals aimed at improving the functioning and liquidity of credit default swap markets, enhancing transparency, and strengthening the quality of information available to authorities. […]