A few years ago Americas sophisticated financial system was hailed as a pillar of its economic prowess. The geeks on Wall Street and their whizzy new products symbolised the success of American capitalism just as much as the geeks in Silicon Valley. Today things look very different. After the worst financial crisis and deepest recession since the 1930s, Wall Street has become synonymous with greed and irresponsibility in the public mind. And while no one doubts that financial innovation made a lot of financiers extremely rich, a growing number of people question whether it did much, if any, good for the broader economy. Paul Volcker, former chairman of the Federal Reserve and an advisor to President Obama, has famously claimed that he can find "very little evidence" that massive financial innovation in recent years has done anything to boost the economy. The most important recent innovation in finance, he argues, is the ATM. Is that a fair assessment? That is what this debate will be about. We will examine whether financial innovation benefited anyone beyond the bankers. Did it boost productivity and enhance economic growth or did it leave the economy less stable and less efficient? Our focus will be sophisticated modern finance of the sort that Wall Street epitomised. It would be too easy to justify the motion above by pointing to the benefits of mobile banking in poor countries or by arguing that Americas 21st-century economy would be dulled if we wound back the clock to the banking system of 1800. Of course financial innovation can, and often does, boost growth. The harder, and more interesting, question is whether the innovations that make up modern cutting-edge finance have done so. To focus the debate in that way we need to decide when cutting-edge finance began and what it includes. Any cut-off risks are arbitrary, but I think a reasonable definition would include all innovations since around 1980, when the modern deregulated era of American finance is widely deemed to have begun. That would include far more than collateralised debt obligations (CDOs), credit-default swaps (CDSs) and other new-fangled instruments that are widely blamed for the financial crisis. A host of products, from exchange-traded funds to inflation-protected bonds, were developed over the past 30 years that had nothing to do with the financial crisis. They should, nonetheless, be included. Indicting financial innovation only on the basis of the instruments that caused problems would be like writing off medical innovation because some drugs had nasty side-effects. Our two debaters have kicked off the discussion with terrific opening statements. Ross Levine, arguing for the motion, makes a persuasive case that financial and technical innovation is inextricably linked. Specialised investment banks emerged in the 19th century to evaluate the profitability of railroad companies. Venture capital firms evolved to analyse and fund high-tech entrepreneurs. He acknowledges that innovation may sometimes trigger abuses and spawn crises, but says that without it the quality of financial services will fall and economic growth will slow. Joseph Stiglitz, arguing against the motion, concedes that financial innovation can boost economic efficiency, but says that much recent innovation has not done so. Rather than promoting the efficient allocation of capital and management of risk, too much recent innovation has been about accounting, and regulatory and tax arbitrage. Innovations that could have improved risk management, such as derivatives, often did not do so because the people who invented them had incentives to abuse them. These are all good points and I look forward to an exciting debate.