This is likely to give rise to a need for measures to increase the banks’ cushion of capital, needed to absorb any future losses. To the extent that needed capital cannot be sourced by the banks themselves, the government has indicated that it will be prepared to make the necessary investments.
Conclusion Financial innovation has great benefits for our economy. The goal of regulation should be to preserve those benefits while achieving important public policy objectives, including financial stability, investor protection, and market integrity.