The system risk can be reduced when someone who’s positively exposed to rising rates trades exposure with someone who’s negatively exposed to rising rates. For

The system risk can be reduced when someone who’s positively exposed to rising rates trades exposure with someone who’s negatively exposed to rising rates. For example, pension funds often benefit from rising rates because they plan on paying out future liabilities with current assets and landlords are negatively exposed to rising rates because they own a stream of income in the future. The trade of interest rate exposure between these parties helps both achieve more stability. A real world example would be taxi drivers trading weather risk with ice cream vans. One party benefits from wet weather that stops people walking outside and the other benefits, so they can trade exposure in a way that makes the system more stable.