Source: Sky News. The president of the European Central Bank (ECB) says a relaxation of banking rules is the “last thing we need” as Donald Trump takes aim at post-crisis regulation in the US.
Mario Draghi made his comments to a committee of MEPs in Brussels just days after the White House confirmed plans to reform several areas of regulation, including Dodd-Frank.
That refers to the wide-ranging measures introduced in 2010 to prevent a repeat of the financial crisis, such as greater regulatory oversight and capital controls. President Trump has long argued that tighter regulation has cost banks hundreds of billions of dollars – money that could have been used to create jobs and spur economic growth. Mr Draghi insisted lax regulation had been a key cause of the crisis a decade ago. He said: “The last thing we need at this point in time is the relaxation of regulation.
He has not been alone in speaking out against the prospect of the US easing back, potentially withdrawing from international efforts to ensure a more stable banking system.
Andreas Dombret, a member of the Bundesbank’s board who is also on the Basel committee that drafts global banking rules, warned any weakening of regulations would be a “big mistake.”
Mr Draghi also spoke up in favour of Germany as it faces accusations from the President’s trade adviser Peter Navarro that it is using a grossly undervalued currency to take advantage of the US through its trade surplus.
The central bank boss told the committee that Germany’s position was a result of monetary policy that is set by the ECB in Frankfurt.First and foremost: we are not currency manipulators. “Second, our monetary policies reflect the diverse state of the (economic) cycle of the eurozone and the United States,” he said.
Mr Draghi also signalled there was no sign of a relaxation of policy for some time to come as euro area growth remained weak and a spike in inflation was likely to be temporary.