I would state it differently.  Derivatives can be quite useful for the economy, because they allow people to offload risk, e.g. companies can hedge their commodity or exchange rate risks.<p>They become a problem in banks that have a lot of them (&quot;weapons of financial mass destruction&quot;) because of their opacity on the balance sheet (DB has one line in their balance sheet for derivatives, ~ 500 billion Euros) and because banks offload their long-tail risks to their depositors and ultimately the taxpayer.  The new bail-in rules mean that depositors in banks are essentially guaranteeing the bank&#x27;s balance sheet.  Think about that the next time you look at your bank account.