This but unironically...I am not aware of a significant innovation that didn't lead to a financial bubble. One of the modern misconceptions is that you can have capitalism without anyone losing money, without bubbles, and with government officials sagely selecting which innovation is legitimate.

It is true that there are countries where this has been attempted, Sweden is one, but the result was that one person got extremely rich, one family in Sweden owned 50-60% of the nation's GDP. And, eventually, it collapses.

You can also see the cross-sectional today: countries which have tried to regulate away financial risk have seen innovation collapse. The UK is the best example which handed the BoE huge powers of financial regulation, and also gave them responsible of a totally new type of financial regulation: prudential. Regulators regulated, and now 3 banks have 80% market share and the price of things they lend against (houses) has skyrocketed and actual productive financial activity has disappeared (same thing happened with CMA, within-industry merger activity has stopped because of the legal costs/regulator intervention...funny thing is that the CMA budget continues to expand significantly, they are now intervening in areas like marketing...despite the UK already having a regulator that does this). Even the BoE has now recognised the massive risks to financial stability that their policies are having but...what can they do, the imperative to grow the budget continues, regulators always find more things to regulate.