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The relationship between the creditworthiness of the hundreds of names that might be referenced in a CDO creates a new risk category. Default correlation risk is the risk that one default makes another default more likely. In a simple example, a default by a major supplier might increase the likelihood of a default by one of its customers. High default correlation in the underlying reference portfolio doesn't just make investing in a CDO more risky overall. It alters its payment profile. Higher default correlation means closer risk profiles for both junior and senior investors. Low default correlation should mean greater pricing differences between junior and senior tranches.

Does present poor hedge fund performance cast doubt on the broad validity of the sector or have new investors that flooded into hedge funds recently fallen for myths about their success and failed to see performance in a historical context? What is clear is that attempts to match capacity to demand have at least temporarily undermined some hedge fund strategies.

Insurers investing in structured credit have been a particular concern. Both the Financial Services Authority in the UK and the Federal Reserve in the US have drawn attention to this. In 2002, FSA chairman Howard Davies suggested that insurers didn't have the resources to assess credit risk transfer in synthetic CDOs.

There has been an unseasonal tension on some of Spain's more exclusive beaches over the past month. August is usually a time for the great and the good of industry to leave the stresses of the cities behind them and unwind by the sea. But for the chairmen of some of the biggest companies, the holidays were spoiled by the knowledge that in the autumn they will be fighting for their jobs.

The youthful managers of Kazakhstan's financial sector are determined that oil and minerals wealth will be used to create a strong mixed economy. A well-regulated banking system and controls on the inflationary effects of oil earnings have been established but diversification and financial markets development still face significant hurdles.

The prospect of next month's European Commission decision on EU membership for Romania has concentrated the minds of the country's politicians and bankers. A flurry of reforms have been accompanied by an acceleration of privatization to get the country into shape for a 2007 accession target.

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This survey is designed to provide a combined qualitative and quantitative review of the best services in private banking, organized by region and by areas of service. It also aims to be an informative guide for high-net-worth individuals on the range of service providers that are available. Our 38 categories are designed to reflect the strengths of both local niche companies and global firms.

Low interest rates and improvements in financial stability and management in large parts of Latin America are putting banks on the path to increased lending capacity as demand for credit increases.

Deflation is on the way, summoning up a long and dreary financial winter. But it should be preceded by a burst of autumn sunshine

Central bankers have been the financial market heroes of the past two decades, for asserting independence from profligate politicians, conquering inflation and resolving financial crises not of their own making. But they have managed themselves out of a job. And what lies ahead for the next generation is frustration and loss of influence.

Foreign investment sentiment was already being battered by the Yukos affair, the Kremlin's attack on what was Russia's biggest oil company. However, waning confidence was dealt a fresh blow in August when a Duma deputy officially called for an investigation into ?grey? schemes used by foreigners to hold billions of dollars-worth of Gazprom shares.