At the same time, at the microeconomic level, financial innovations were implemented in a manner that fostered wrong incentives, notably in the securitisation process, which should have helped, in principle, to better diversify and manage economic risk. The securitisation of assets made it possible for financial institutions to sell loans within complex and opaque financial products and to take them off their balance sheets.
However, the potential for a deterioration in financial stability to further intensify risk aversion seems significant. For countries like New Zealand with substantial borrowing from abroad this could clearly have an impact on our cost of funds and/or our access to funds in some global financial markets. BIS Review 28/2008  3