Speaking at a Financial Sector Advisory Center conference last week, Fernando Restoy, Chair of the Financial Stability Institute (FSI), challenged a growing narrative that stricter regulation is holding back the European banking sector.
While acknowledging the case for simplifying certain requirements, Restoy rejected the view that post-crisis reforms have fundamentally impaired banks' ability to support economic growth. "I believe the claim that the post-crisis prudential framework is significantly undermining banks' businesses has yet to be convincingly substantiated," he argued. If anything damages economic growth, he emphasized, it is financial crises, not regulation.
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