The head of the European Central Bank expressed concern about the Trump administration’s moves to relax financial oversight, saying such deregulation helped pave the way for the global financial crisis.
During a hearing in the European Parliament, ECB President Mario Draghi was asked about Trump’s efforts to revisit parts of the Dodd-Frank regulations aimed at keeping risk-taking banks from sparking a repeat of the 2007-9 financial turbulence that launched the Great Recession.
“Frankly, I don’t see any reason to relax the current regulatory stance which has produced a much, much stronger banking – and, generally, financial services – industry than we used to have before the crisis,” Draghi said.
Draghi said that financial deregulation and expansive monetary policy were “exactly the ground on which the financial crisis developed.”
He added that more clarity was needed on what exactly Donald Trump’s government plans to do. Trump on Friday directed the Treasury to look for potential changes in the law’s provisions.
Responding to questions from the members of the parliament’s economic and monetary affairs committee, Draghi also rejected claims by the Trump administration that Germany gets unfair trade advantage from a weak euro.
Peter Navarro, head of the U.S. National Trade Council, has claimed that Germany is exploiting what he called a “grossly undervalued” currency. Lower currencies help exports; the euro has fallen from around $1.40 in 2014 to around $1.07 now.