Credit derivatives are financial tools tied to bonds or loans. They've grown rapidly, reaching $60 trillion in 2008. Credit default swaps were a big part of this growth. They're used to hedge and transfer credit risk. But during the financial crisis, misuse and lack of rules caused problems. Some want to ban these tools, while others look for different solutions. This paper aims to explain credit derivatives, how they work, and their role in the global financial system and crisis.