The Need for an Innovation Principle in Regulatory Impact Assessment: The Case of Finance and Innovation in Europe. Issue 4 (December 2014) - Zilgalvis, Pēteris
Abstract Many of Europe's economies are hampered by a waning number of innovations, which in part is attributable to the European financial system's aversion to funding innovative enterprises and initiatives. Specifically, Europe's innovation finance ecosystem lacks scale, plurality, and risk appetite. These problems could be addressed by new and creative approaches and technologies for financing dynamism in the economy, such as crowdfunding and general financial technology or "FinTech" innovation. However, these novel approaches may be held back by regulation that focuses on stability, avoiding forum shopping, and preventing fraud, to the exclusion of other interests, particularly ignoring innovation and renewal. This article argues that this could be addressed by adopting an "innovation principle" in regulatory impact assessment: prioritizing regulatory approaches that serve to promote innovation while also addressing other regulatory aims. Two case studies are presented to illustrate this approach.