One recurring theme in international economics is how households & firms evade restrictions on trade and capital controls. In a curious twist, policy hostility against debt flows is reminiscent of "Islamic finance" where straight debt is considered bad. So interesting ideas on rerouting business past proscriptions against Islamic finance are relevant when thinking about what the private sector will do when faced with rules against debt flows. You may also be interested in an earlier blog post on synthetic corporate bonds.
The paper referenced above is:
The Ancient Roots of Modern Financial Innovation: The Early History of Regulatory Arbitrage by Michael Knoll [direct link]. The abstract reads: Recent years have seen an explosion of financial innovation. Much of this innovation seeks to exploit inconsistencies in the regulatory environment, and one of the most popular techniques for doing so uses put-call parity. Nonetheless, regulatory arbitrage using put-call parity is not a new phenomenon, as is frequently suggested. This Essay traces the use of put-call parity to avoid the usury prohibition back to Ancient Israel. It also describes the important role that put-call parity played in developing the equity of redemption, the defining characteristic of a modern mortgage, in Medieval England. In addition, this Essay describes how Muslims living in the West are using mortgage substitutes based on put-call parity to avoid Islam's prohibition on paying interest.