The ending of the Bretton Woods accords in 1971 marked the beginning of a long process of financial deregulation and globalisation. The financial system continued to evolve and innovate, enabling banks to improve their profitability and market share. But it remains true that innovation, the source of social progress, is a risky activity that has to be managed at the risk of fuelling instability. The history of the last three decades serves as a testament to the adverse effects of unbridled financial innovation. Faced with this threat, a safeguard proved necessary: regulation.
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