2. A CDS transfers the default risk of the underlying reference debt security from a holder of the reference debt who buys the CDS to the CDS seller. The buyer makes a stipulated series of quarterly or semiannual premium payments to the CDS seller as consideration. These payments continue until the maturity of the CDS unless terminated earlier upon the occurrence of the default event. The CDS seller, usually a financial institution that wants to assume the credit exposure, agrees to pay a stipulated percent of the notional amount of the reference debt in the event of default and upon receipt of a deliverable security from the CDS buyer. Naked CDS purchases, i.e., without also holding or acquiring the underlying deliverable reference security is a directional credit bet that the credit of the reference security and/or its issuer will decline or default. Various sovereign governments in the Euro-zone and elsewhere have, with dubious merit, blamed credit shorts via CDS, either covered or naked, for the financial pressures on their economies and have even banned such trading for a period of time.