Financial innovations, blamed for exacerbating the financial crisis, still face a major perception problem, but a new report says that they should continue to be developed – with better controls.

The study, published on Friday by the World Economic Forum and consultancy Oliver Wyman, outlined steps that firms and regulators should take to ensure the responsible development of financial innovations - which include products such as collateralised debt obligations and credit default swaps. The WEF urges stress tests, market trials and changes in incentive structure to stem potential negative outcomes.