![]() ![]() This traditional positive approach to financial innovations was associated with the then dominance of innovation–growth proponent school, which considered innovations as an engine of growth. By then, they were considered to be the useful and non-controversial component of the financial system, providing, inter alia, more flexibility to established rules, reducing agency costs, completing the markets, allowing for better risk distribution in the financial sector, and improving its allocative efficiency. Innovations in financial systems and financial services did not attract particular public attention either among researchers or among the policy makers before the outbreak of global financial crisis in 2007. With the rise of new technology, there is the clear switch from analog to digital world. ![]() They are producing ever deeper structural changes in the entire financial system. They find their application in financial services and markets, and their societal and economic weight is dramatically increased. What is new, however, since the last 10 years or so is the accelerated pace of technological innovations based on the use of computers and digitalization. Let us remind in this context the role played by the development of telecommunication, in particular, the telephone and telegraph, for the financial services, application of ATM, or diffusion of high-frequency trading. The same is true with the application of technological enablers to financial innovations. They have already had a long history, to recall introduction of a double-entry book keeping, establishment of modern central banking, application of fiat-based monetary system, development of local and international payment systems, invention of securitization, collateralized debt obligation (CDO), or parametric insurance. Financial innovations are nothing new in financial development. ![]()
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