European Central Bank head Mario Draghi has called the US administration's idea of relaxing bank rules "very worrisome".
ADVERTISEMENTThe head of the European Central Bank Mario Draghi has called the idea of relaxing bank rules “very worrisome”.
His comments came after US President Donald Trump ordered a review of rules that were brought in to prevent a repeat of the 2008 financial crisis.
Draghi told the European Parliament’s committee on economic affairs in Brussels: “The last thing we need at this time is the relaxation of regulations.”
He continued: “I think to a great extend the fact that we are not seeing the developments of significant financial stability risk is the reward of the action that legislators and regulators and supervisors had been undertaking since the financial crisis erupted.”
He said the present rules have “produced a stronger banking and financial services industry than before the crisis”.
Not a currency manipulator
Draghi also rejected US accusations that Germany is a currency manipulator. Peter Navarro, head of the US National Trade Council, has said that Germany is using a “grossly undervalued” euro to gain an unfair trade advantage.
“First of all we’re not currency manipulators. Second, the monetary policies we’ve been implementing reflect the fact that the eurozone and of the United States are different positions in the [economic] cycle,” Draghi said.
Draghi cited a US Treasury report that said Germany “has not engaged in persistent, one-sided intervention in foreign exchange markets”.
Saving the euro from itself is a work in progress for the ECB's Draghi https://t.co/ZfUWFhAex0pic.twitter.com/lONw0tX9pI
— Business Insider (@businessinsider) February 6, 2017
Rising inflation won’t prompt stimulus wind-down
Draghi rejected the idea of the European Central Bank reducing its stimulus for the eurozone as inflation is now picking up. He said they do not react to short term and temporary swings in data, adding “underlying inflation pressures remain very subdued”.
Draghi: Support from our monetary policy measures is still needed if inflation rates are to converge towards objective in sustained manner
— ECB (@ecb) February 6, 2017
The currency bloc’s recovery is gaining strength but labour market slack remains large, productivity growth is weak and risks remain tilted to the downside, requiring the ECB’s continued help, Draghi said.
Eurozone inflation hit 1.8 percent in January and is likely to exceed the ECB’s target of almost 2 percent in the coming months, firming resistance in Germany, the euro zone’s biggest economy, to the ECB’s policy of easy cash.
But core inflation, which excludes energy and food prices, is still low and Draghi pointed to weak underlying trends as a key reason for continued monetary support.
