Combined with new technology and financial innovation, this should have made markets more efficient at disciplining economic performance.
They are not, however, the type of financial innovation that will make businesses more competitive or redefine economies.
The marriage of housing and financial innovation may look like an ugly match in light of the crisis.
In this role, Ms. Donovan draws from an extensive background in community finance, capital markets and financial innovation.
By its nature, legislation moves more slowly than financial innovation, so the rules never catch up to market practices.
Finance is also a boom industry, fuelled by an explosive combination of economic growth, demography, technology and financial innovation.
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Financial innovation has a bad reputation at the moment, because exotic derivatives were one of the causes of the credit crunch.
To be sure, such financial innovation has outrun regulation, allowing the widespread fraud that ultimately crashed real estate values and the economy.
For instance, excessive regulation can stifle financial innovation, reduce the flow of credit to worthy firms and consumers, and impede economic growth.
But members such as Paul Volcker, a former Fed chairman, want to see a balance struck between financial innovation and economic stability.
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One financial innovation that ProLogis pioneered and that other industrial REITs are copying is to bring in equity partners to bolster their finances.
All of this means it makes sense to think of Bitcoin less as an alternative currency than as a new platform for financial innovation.
FORBES: Bitcoin Is A Bad Currency But It Might Be A Good Platform For Financial Innovation
Between 2004 to 2007, many home-owners apparently logged Mr Greenspan's endorsement of "financial innovation" and took out mortgages with exotic names such as Option ARM.
However perhaps it is luddite to rail against all financial innovation.
Mutual funds, themselves a financial innovation from 1924 ( see page 124), give the small investor what large investors always could afford: professional management and diversification.
When it comes to innovation I'll raise a question with you: What is the most important financial innovation in the past 20 or 30 years for the average person?
But mobile money and other new ideas that could help the poor (see article) provide a useful reminder that financial innovation in itself is not always a bad thing.
Craig Lewis, director of the SEC's division of risk, strategy and financial innovation, said it would be about nine months before it was rolled out, although it could appear sooner.
Financial innovation in derivatives soared ahead of the rule-setters.
One particularly innovative partner which illustrates our approach is the Center for Financial Services Innovation (CFSI) whom we worked jointly with to establish the first ever US Financial Capability Innovation Fund.
FORBES: Citi Foundation: Investing in Products, Access and People for Financial Inclusion
We are working hard with the SEC to bring crowdfunding for equity into fruition and the world is watching the US as we collectively frame and move to enact this financial innovation.
The United States has to find new ways to pay for roads and bridges either through technological or financial innovation or else learn to live without them, experts agreed at a Metropolitan Planning Council forum in Chicago Monday.
Inflation and interest rates were coming down from high levels, household leverage was very, very low, financial innovation non-existent, consumption had been deferred, and demography was coiled as the baby boomers were just coming on line.
Now, in affirming the superior attributes of bitcoin in the role of financial innovation, the ECB correctly identifies why the profligate issuers of national fiat currencies will ultimately feel threatened by such a decentralized nonpolitical unit.
FORBES: ECB: "Roots Of Bitcoin Can Be Found In The Austrian School Of Economics"
If by regulation we mean the government should get in the way of true financial innovation, then soon enough the vibrant financial institutions of the past will be out-innovated by their unregulated brethren on the way to irrelevance.
In 2005, he shocked bankers at a celebration honouring Alan Greenspan, who was about to retire as chairman of the Federal Reserve, with a paper that argued, unusually then, that financial innovation had made the world economy less safe.
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Result: Financial innovation continued in Britain, enabling it not only to become the world's foremost industrial power but also to create and then tap its citizens' savings to fight--ultimately, successfully--its perennial wars against far larger and more powerful France.
So for the world as a whole, if a financial transactions tax put a bit of a dampener on financial innovation and trading (whether low frequency or high frequency), that would probably be no reason to weep - unless (to state the obvious) investment banking is your life.
Reagan, whose life spanned from the pre-Federal Reserve world at the time of his birth to the era of computer-driven financial innovation during his presidency, appreciated how difficult it was to achieve lasting monetary stability because he had seen the ups and downs of most of the twentieth century.
The response of the Basel Committee, the Financial Stability Board, the European Commission and the G20 has been to devise ever more complicated and more detailed rules to limit the risks to banks and the wider economy of the byzantine complexity of the way banks manage themselves and the astonishing counter-intuitive complexity of products created by financial innovation.
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