How does the process of financial innovation impact the effectiveness of macroprudential$$ regulation?

A$.$

As new financial innovations$$ arise, regulators are better able to understand their impact on the financial system and thus may prevent a future bank crisis.

B$.$

Because financial innovations are constantly$$ changing, they tend to reduce the efficiency of the financial system.

C$.$

It may be difficult for regulators to understand how new financial innovations will impact the overall financial$$ system, as these innovations may often be mismanaged or misunderstood.

D$.$

With financial innovation and the new financial instruments$$ created, legislation has$$ increased, which has made financial regulation more difficult.