In recent comments to the Financial Times, two senior European financial regulators warned that financial sector deregulation could lead to another crisis.
"If it is about deregulating and lowering the bar on financial protections, we will not be ready to tackle volatility," said Dominique Laboureix, Head of the Single Resolution Board. "That means crises, which means less growth."
The warning comes as the European Commission plans to simplify business sustainability disclosure rules and review capital regulations for banks and insurers. Some officials, including the heads of central banks in Germany, France, Spain, and Italy, have argued that complex regulations hamper international competition without improving stability.
Laboureix expressed willingness to discuss regulatory simplification but refuses to compromise financial stability. "Don't forget the 2008 crisis. What did that mean? Bailouts everywhere," he recalled.
Frank Elderson, Vice-Chair of the Supervisory Board of the European Central Bank, reminded that Eurozone governments spent €1.5tn in capital support and €3.7tn in liquidity support after the crisis. "It's good to remember why we did that in the first place," Elderson told the FT. "We need not be complacent and say the next decade will be rosy — so we have to be wary about doing away with supervisory functions that could lead to this situation repeating itself."
Elderson supports harmonizing regulations across EU member states, rather than cutting them. He also warned against excessive reductions in sustainability disclosure rules, which could hinder banks' ability to assess climate risks.
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