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.
These financial techniques weakened incentives for the prudent screening and monitoring of credit risk and led to banks loosening their lending standards. Eventually, when the global financial system was thrown into crisis, many policy-makers were shocked to discover that they did not have the macroprudential tools to deal with part of the financial system spiralling out of control.