Andrew Sheng says the fourth industrial revolution has given rise to blockchain technologies that move transactions out of the purview of regulatory systems, leading to an outflow of talent and innovation from the traditional banking sector Most people are somewhat aware of the fourth industrial revolution. The first industrial revolution occurred with the rise of steam power and developments in iron and steel manufacturing.

The second started with the assembly line, which allowed specialisation of skills, represented by the Ford motor assembly line at the turn of the 20th century. The third revolution came with Japanese quality control and use of telecommunications technology.

The fourth industrial revolution, or Industry 4.0, is concerned with artificial intelligence, robotics, genomics, creative design and high-speed computing capability to revolutionise production, distribution and consumption.  Finance is a derivative of the real economy – its purpose is to serve real production. Early finance was geared towards funding trade and governments’ war efforts.

The first central banks in Sweden and England were established in the 17th century at the start of the first industrial revolution. Industrialisation became much more sophisticated with the advent of Finance 2.0 – the rise of credit and equity markets in the 18th and 19th centuries.

Industrialisation and colonisation came about at the same time as the globalisation of banks, stock and bond markets.  CEO says 5G internet is ‘beginning of the fourth industrial revolution’ Clear policies needed if Hong Kong is to benefit from the fourth industrial revolution   With the invention of first the fax machine and then the internet, which speeded up information storage and transmission in the 1980s, finance and industry leapt into the age of information technology. Finance 3.0 was the age of derivatives, in which very complex (and highly leveraged) financial products became so opaque that investors and regulators realised they were what Warren Buffett called “weapons of mass destruction”. Read more from…

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