There is an active debate underway on the first of these – the likely future path of innovation. Some have recently argued that the pace of innovation may be declining. 43  The argument here is that many of the  low-hanging fruit from the ICT revolution have already been picked. Diminishing returns to R&D may have set in. And other secular forces – including adverse demographics and rising inequality – may have acted as additional headwinds to growth. 44  This view sometimes goes by the name secular stagnation. 45  An alternative school of thought believes we may instead be on the cusp of a new great wave of innovation, a Fourth Industrial Revolution. 46  This revolution in innovation will, it is said, be jet-propelled by a set of  potentially new GPTs, among them AI, Big Data and robotics. For technology optimists, the story is one of secular innovation, not stagnation. And on this view, the potential gains in productivity and growth could be as large as any of the earlier industrial revolutions. 47  42  Schumpeter (1942). Gordon (2012), Fernald (2014). 44 Summers (2013) and Rachel and Smith (2015). 45 Secular stagnation theory was originally proposed by Hansen (1938) in the aftermath of the Great Depression 46 Brynjolfsson and McAfee (2014) discuss ‘The Second Machine Age’. 47 Brynjolfsson, Rock and Syverson (2017).
While individual jurisdictions may be confronted with specific challenges of implementation that may arise from differences in economic and market structures, there is also much in common, particularly among emerging economies, that can be shared among jurisdictions. The period of observation on some of the components of the reform package provided by the Basel Committee is welcomed. It will allow jurisdictions to consider appropriate actions needed to support the effective implementation of the reforms. At the same time, there is an expectation that there will be a willingness by the international standard setting community to adjust or otherwise supplement current prescriptions, frameworks or implementation strategies as more experience is gained under changing market conditions. The effective implementation would also require support for the implementation of the reforms, particularly in the area of capacity building, particularly in the emerging and developing world. Inclusive communication channels with the market and an inclusive process of global consultations will allow us to benefit from the experience of others and, more importantly, facilitate more coordinated policy responses and thus support the orderly adjustments to the new standards. While the evolution of financial stability policies over the recent two years has seen clearer mandates being established for the regulatory authorities, the framework for financial stability both at the national and international levels continue to be a subject of intense discussion.