Higher interest rates no hindrance to innovation, say industry watchers at Davos

[DAVOS] FEARS that a high-interest-rate environment will hinder innovation or private capital investment are overblown, according to private investors and financial regulators attending the World Economic Forum. But they do see room for some correction of valuations, and for more regulation in some parts of the financial ecosystem.

Central bankers are sometimes criticised for raising interest rates, with the argument that this will kill or diminish innovation, said Francois Villeroy de Galhau, governor of the French central bank.

Higher rates also mean a higher cost of capital, which has caused some investors to turn more cautious and pushed some startups to tighten their belts.