Substantial progress has been made in identifying and controlling the concentration of exposure to specific risks, especially market risk and credit risk. Third, the introduction of derivative instruments, such as credit derivatives, has allowed a better distribution of risk across the system, as well as better risk management by institutions.
But the inflow of foreign capital would be much reduced if there were uncertainties about whether the capital could be freely repatriated. While historically there could be considerable risk in American investments -- for example, some nineteenth century investments in American railroads entailed large losses -- the freedom of repatriation and the sanctity of private contracts were, with rare exceptions, secure.