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Draghi defends bank regulation, says eurozone recovery not yet strong


economy

Draghi defends bank regulation, says eurozone recovery not yet strong

The head of the European Central Bank, Mario Draghi, has been speaking out against the idea that the rules governing how commercial banks operate should be relaxed.

His comments come amid concerns that the new US administration of Donald Trump could roll back the regulations intended to reduce risks that were introduced since the financial crisis.

At the European Banking Congress conference in Frankfurt he said: “Bank regulation needs to enter a period of stability and there is no need to redesign the rules.

“The focus should be on implementation, not on new design. Regulatory measures should be implemented in a balanced way that ensures a level playing field globally. And while marginal adjustments are possible, there should be no rolling back on what’s been decided.”

Draghi also said the eurozone’s recovery is not yet strong enough, signalling the European Central Bank is going to press ahead with its stimulus programme.

“Going forward our assessment will depend on whether we see a sustained adjustment in the path of inflation towards this objective. And that means that inflation convergence towards 2.0 percent is durable, even with a reduction in monetary accommodation. Inflation dynamics, in other words, need to be self-sustained.”

The feeling in the financial markets is that the ECB will announce an extension of its bond buying beyond their March deadline at the policymaker’s December 8 meeting.

On the US situation, ECB officials have said a shift towards protectionism under Trump could hurt the eurozone’s already fragile economy.

Venturing into the political arena they have also expressed worries that populism fuelled by the Trump victory could pave the way for an even stronger backlash against globalisation and the euro project.

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