"That's what Harvard produces: Socialists and people unable to give a straight answer to a simple question.
Ais nothing more than a form of insurance on a loan: The lender subscribes a policy with the bank. The bank promises to compensate to the lender for any payments defaulted by the borrower. In exchange for that promise, the lender pays to the bank an insurance premium.
Is that so hard to explain, Mr. Professor and IMF boss??
Have you ever wondered why most banks, the IMF, the Fed, etc. failed to foresee the credit crisis?
Because they are full of students taught by mediocre "Professors" like this one ...