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Finance

Posted By Global Banking and Finance Review

Posted on January 15, 2025

US financial deregulation would raise crisis risks, French central bank chief says

PARIS (Reuters) - Any moves to pursue financial deregulation by the incoming U.S. administration would increase the risk of a financial crisis occurring one day, France's central bank governor warned on Wednesday.

U.S. President-elect Donald Trump's return to office has raised the prospect of radical changes to the U.S. regulatory framework built up over decades to oversee financial services and banking, as well as digital currencies.

"Financial deregulation as some people are calling for in the United States would be dangerous, including for the financial system itself," Bank of France Governor Francois Villeroy de Galhau told the French Senate's finance commission.

The potential next head of a U.S. banking regulator, Trevor Hill, outlined wide-ranging plans earlier this month for a lighter touch on the banking industry on matters ranging from capital reserves to cryptocurrency.

Hill said he expected U.S. regulators to reconsider efforts to impose new capital requirements on large banks under internationally agreed Basel III regulations, which have already stalled under the Democratic leadership.

Washington has dragged its feet on the new rules, which more than two-thirds of the countries belonging to the Basel Committee on bank regulations have already adopted.

While Basel III has helped keep the European banking system stable, Villeroy said regulators in Europe should consider "adjustments" to ensure that the sector remains competitive.

He added that adopting a light U.S. regulatory touch for non-bank financial actors such as various types of funds, venture capital, private equity as well as cryptoassets would also put financial stability at risk.

(Reporting by Leigh Thomas; Editing by Hugh Lawson)

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