Question 602.3. In regard to lessons of the global financial crisis (GFC), Gregory writes, "The OTC derivative market developed other mechanisms [i.e., in addition to netting and margin requirements] for potentially controlling the inherent counterparty and systemic risks they create. Examples of these mechanisms are SPVs, DPCs, monolines and CDPCs. Although these methods have been largely deemed irrelevant in today’s market, they share some common features with CCPs and a historical overview of their development is therefore useful … The concepts of SPVs, DPCs, monolines and CDPCs have all been shown to lead to certain issues. Indeed, it could be argued that as risk mitigation methods they all have fatal flaws, which explains why there is little evidence of them in today’s OTC derivative market. It is important to ask to what extent such flaws may also exist within an OTC CCP, which does share certain characteristics of these structures."³

In regard to the lessons of the crisis and these mechanisms—i.e., SPV, monolines, and CDPC—each of the following statements is true EXCEPT, which is false?