Like water finding its way around an obstruction, markets always manage to find a way around regulation. This has certainly been the case with the capital adequacy rules in the first Basle Accord, the 1988 guidelines on the minimum amount of capital banks must hold against counterparty credit risk.

The rules were one reason for the invention of securitisation - the repackaging of future cash-flows (such as loan repayments) into differently rated bundles, or 'tranches', for investors to buy. Banks can use securitisation to offload assets for which the regulatory capital (the amount the bank must hold against credit risk) is higher than the economic capital (the capital the bank itself judges it needs to hold).