In any event, it is clear that the consequences of a change of trend in the perception and concentration of risks were seriously underestimated, notwithstanding the many analyses and signals that had become available in recent years. 6  BIS Review 49/2009  Excessive deregulation of the financial sphere was also accompanied, as recalled earlier, by an unprecedented development of financial innovation.
There was an enormous increase in the supply of complex instruments for hedging risk, structured products often very difficult to value if not using mathematical-statistical techniques whose application presupposed at least three conditions: (1) the availability of the basic information necessary to determine the quality of the products (securities or loans) underlying these instruments (in other words, the likelihood of the loans and bonds being honoured); (2) the validity, essentially over time and in the real world, of the arbitrage principle; and (3) a sufficiently high degree of liquidity in the markets.