What Can a Sandbox in Arizona Do for Financial Innovation?

Wayne A. Abernathy

History demonstrates that innovation is one of the things that a free society does best.  Fostering innovation was one of the goals of the Founders who created a federal system of government, since centralization of power tends to discourage new thinking, creativity, and new ways of doing things.  This is particularly true for new ways of doing things that can challenge “old ways.”  Some “old ways,” such as freedom and individual rights, are timeless.  Others are more temporal and in need of adjustment to remain relevant to evolving societies and conditions.

The United States economy has thrived on innovation in technology, with an economy ever ready to test new products.  Many fail, perhaps most fail, but a great many succeed, tested by whether they meet the needs and interests of enough of the marketplace to reward the innovator.

As government has grown, the danger of government interfering with innovation, taking the place of markets in picking winners and losers, has increased.

Here is a very interesting—and brief—opinion piece by Arizona Attorney General Mark Brnovich, who offers a proposal for creating more regulatory space for financial innovation.  Our wonderful federal system allows states to try some experiments that may not yet be embraced at the national level.  Every time you use a personal checking account, you should thank states for that financial innovation.  We should hope that there will always be room for more innovation for better products and services.

Wayne A. Abernathy

Executive VP for Financial Institutions Policy and Regulatory Affairs

American Bankers Association


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