I am learning about central clearing.
In my understanding, CDS are usually cleared via central clearing.
But at the same time I heard that in case of too much correlation such as US bank selling protection w.r.t. US Gov, trades cannot happen b/c no one wants to enter into this wrong way risk.
If such CDS is centrally cleared there is no need to worry about correlation. Why people care about correlation between cds ref and protection seller? Or suc CDS cannot be centrally cleared?