The current system requires 80% of the ISDA's Credit Derivatives Determinations Committees to vote that an event has occurred. You see to think a purely mechanical system would be better, but it's not obvious to me why this would be so. It would certainly be different.
> Look ma, no more humans!
Yes, but why is that good? Is the role of humans in the CDS process a problem? Why? A CDS is a contract between two parties; do you believe more automation in the process would benefit the seller, the buyer, both, or society at large? And how?
The main advantage of the blockchain would seem to be its distributed nature and it's ability to not need any central trusted authority. But in the cases of CDSs, we have a central trusted authority in the form of the ISDA.
Again, we come back to the issue of needing to begin by defining the problem we're trying to solve, and then demonstrate how a blockchain could solve it. What problem with the existing system are you trying to solve?
Consider a Credit Default Swap: where you promise to pay the interest on a Bond in the case said Bond defaults. Currently, humans enforce this promise. If a bond defaults, some human notices (probably by telephone) and then they run to the bank and start writing checks.
But what if you wrote an Etherium contract to automatically enforce the agreement? And then the trust in the Etherium blockchain to enforce the contract allows you to tie real money transactions to the whole process? Look ma, no more humans!