Photo credit: www.investing.com
Concerns Over Financial Deregulation Under Incoming U.S. Administration
PARIS (Reuters) – The possibility of financial deregulation from the upcoming U.S. administration poses a significant risk for a future financial crisis, cautioned the governor of the Bank of France on Wednesday.
The re-election of U.S. President Donald Trump brings forth discussions regarding substantial alterations to the regulatory landscape that has been developed over the years to manage financial services, banking operations, and the rapidly evolving digital currency sector.
“Some advocates for financial deregulation in the United States are overlooking the potential dangers this could pose, not only to the overall economy but also to the integrity of the financial system itself,” stated Francois Villeroy de Galhau during a session with the French Senate’s finance committee.
Highlighting the potential direction of U.S. financial policy, Trevor Hill, a candidate for a prominent banking regulatory position, has recently proposed an extensive reform agenda aimed at easing regulations affecting the banking sector. This would encompass a range of issues from capital reserves to the oversight of cryptocurrencies.
In his remarks, Hill suggested that U.S. regulatory bodies may reevaluate the implementation of new capital requirements for large banking institutions, as outlined in the internationally recognized Basel III framework, which has encountered delays during the current Democratic administration.
This stalling reflects a broader hesitation within Washington concerning the adoption of these new regulations, with more than two-thirds of the nations within the Basel Committee having already implemented similar measures.
In contrast, Villeroy noted that while Basel III has been beneficial in maintaining the stability of the European banking sector, it is crucial for European regulators to contemplate “adjustments” that would enhance the competitiveness of their financial institutions.
He warned that relaxing regulatory standards in the U.S. for non-bank financial entities, including a variety of investment funds, venture capital, private equity firms, and cryptocurrency markets, could also jeopardize overall financial stability.
Source
www.investing.com