The erosion of legal and regulatory barriers has permitted banking organizations to expand their scope of activities. And both the relaxation of trade barriers and the freer flow of capital have facilitated the operation of banks across national boundaries. Financial and technological innovations have had an equally dramatic effect on financial markets and institutions.
As a result of technological innovations, the increased speed and reduced cost of transacting have improved the depth and liquidity of financial markets. These improvements, together with advances in financial theory, have led to the adoption of new and arguably more complex tools for measuring, taking, and controlling risks.