Perhaps, then, we should consider the growth in financial innovation as being analogous to Moore’s Law, which has for more than a generation accurately predicted the growth in computing power of a transistor at constant cost. 7 Neither Moore’s Law nor the development of new financial products is a mathematical or physical certainty based on some geometric extrapolation or law of the universe.
Rather, it is an ex post description of that which already transpired, an occurrence caused by a healthy mix of investment in human and technological capital, a culture of capitalism, and sound regulatory and legal policies. As a result, meaningful erosion of any these core elements could impair the future evolution of financial products and jeopardize the continued development of markets.