To a significant degree, the growth in securitization and other forms of regulatory arbitrage has been spurred by the inadequacies of the international capital standard. This has occurred largely because, over the last decade, many of the larger banks have developed fairly sophisticated internal models for formally quantifying risk, including credit risk within the banking book.
Efforts could also be made to improve transparency in evaluating activities related to Environmental, Social, and Governance -- or ESG -- and to further develop the assessment methodologies of climate-related risks and opportunities. Many business firms emphasized the importance to their business strategy and investor relations, including earning a good reputation and diversifying their investor base, as motivation for issuing ESG bonds.