Hilary Allen’s new book, Driverless Finance, is out.  I’ve decided to dedicate some blog posts to it as I read my way through to help introduce it to readers.  

It begins with a short prologue set in 2031 and takes the form of a report on the causes of the 2030 financial and economic crisis.  This struck me as a solid way to begin and help people understand the risks.  We’ve had many financial crises.  We will likely have more of them.  It’s important to be thinking now about how the next one might arise.  The report makes a case that the next financial crisis might be tied to the rise of cryptoassets and artificially intelligent trading algorithms.  But the report doesn’t stop there.  It touches on developing risks to payment systems, a general lack of preparedness, corporate governance failures, and failed financial regulation.  Although there is no way to know how the next crisis will play out, the prologue’s 2031 retrospective struck me as fairly plausible from where we are right now.

Allen’s introduction makes a compelling case that we need to pay more attention to what’s happening right now in the financial system before things escalate in a way that threatens financial stability.  I’m looking forward to getting deeper into it in the weeks ahead.