, 7 output from the oil sands is expected to grow by 3 million barrels per day by 2020, representing about 15 per cent of expected marginal global demand. 8 other supplies can be expected to come on stream, and alternative energy sources should be developed. although there will be lags, it would be a mistake to assume that the market has ceased to function. demand will also be more responsive over time. suv sales in the united states have fallen by nearly one - third so far this year – an important early indicator. oil demand in oecd countries has been essentially flat since 2003, and the international energy agency projects it to remain weak for the next few years. 9 as a result, the extent of continued upward demand pressure will depend almost exclusively on emerging markets. there are several considerations. first, we are about to find out the extent to which slowing domestic demand growth in the g - 7 will affect growth in emerging asia. second, the stance of monetary policy in emerging markets will be an important determinant of prices in the short term. monetary policy remains highly accommodative in a number of fast - growing economies that are major marginal consumers of commodities. the combination of accommodative monetary policy and overheating economies will eventually be reversed, either through policy action or generalized inflation. in either case, aggregate demand in emerging markets will likely slow relative to current trends. a third consideration is that the demand response in many economies is currently being muted by the prevalence of administered food and energy prices. these efforts to protect the most vulnerable are usually poorly targeted and, as a consequence, highly distortionary. by keeping domestic commodity prices artificially low, the authorities are simultaneously data supplied by the energy information administration ( eia ). see http : / / www. eia. doe. gov / ipm /. according to the canadian association of petroleum producers ( capp ), a 100, 000 - barrel - per - day integrated oil sands project that cost $ 3. 3 billion to build in 2001 now costs over $ 10 billion. see http : / / www. capp. ca / raw. asp? x = 1 & dt = pdf & dn = 134739. data provided by imf. data provided by alberta finance and enterprise. production estimate from capp. demand estimate from the eia. data from the energy information administration. see http : / / www. eia. doe. gov / emeu / steo

pension funds. hedge funds are also large actors. the main sellers of credit risk are banks and other credit institutions who want to relieve themselves of parts of their credit risk, for instance to meet capital adequacy requirements from authorities or merely to use their capital more efficiently. in practice, the credit derivative market is centred on a few globally - active banks, which function as brokers in the trade. the ten largest counterparties on the market account for a good 85 per cent of the total volumes traded and are represented by large investment banks such as morgan stanley, goldman sachs and ubs. at the same time as the volumes have increased, the products have developed. the largest growth is currently in the new products, including what is known as index products. somewhat simplified, a typical index product reflects a portfolio of credit risks in different companies, instead of reflecting the credit risk in a single company 3. the index products increase the investors ’ opportunities to spread their investments in the credit market. in this context, i would also like to mention that there are alternative credit insurance methods that have likewise developed strongly. one of these is traditional syndicated loans. a syndicated loan is a loan where a bank sells parts of the loan to other banks ; this is usually done internationally. these loans, like credit derivatives, have the advantage of spreading the risk in a large credit exposure over many hands, but are not traded so actively in the market. another means of selling risk is to put together a number of credits to form a portfolio and then finance this portfolio by issuing bonds. this is called securitisation. the portfolio is often sliced up into different risk tranches, and the bonds corresponding to each tranche are sold to different investors, depending on what risk the investors are willing to bear – and to what price. these products in themselves are sufficient material for a whole speech – so let me just note that credit derivatives are not unique when it comes to trading in credit risk. where are the dangers in the market? i have now gone through a number of advantages with credit derivatives and described their remarkable growth. but at the same time, they have brought with them a number of risks. these are mainly related to the market being new and relatively untested. there is a possibility of " teething for example, itraxx europe consists of the 125 most liquid company names in the cds market in europe. the 125 cds contracts weighted equally in the index. problems ”. let me therefore comment one at