PARIS, Jan 15 (Reuters) - France's central bank governor warned on Wednesday that any efforts towards financial deregulation by the incoming U.S. administration would heighten the likelihood of a future financial crisis. U.S. President-elect Donald Trump's potential return to power has sparked discussions regarding significant alterations to the regulatory framework governing financial services, banking, and digital currencies. Bank of France Governor Francois Villeroy de Galhau addressed the French Senate's finance commission stating that pursuing "financial deregulation as some people are calling for in the United States would be dangerous, including for the financial system itself."
Trevor Hill, a possible future U.S. banking regulator, presented plans for a less stringent approach towards the banking industry, covering areas such as capital reserves and cryptocurrency. He expressed his anticipation for U.S. regulators to reconsider the implementation of new capital requirements for large banks in line with the Basel III regulations, which have faced delays under the previous Democratic leadership. Villeroy highlighted that while Basel III has played a role in maintaining stability within the European banking system, European regulators should contemplate "adjustments" to ensure competitiveness.
The governor further cautioned against adopting a lenient regulatory stance for non-bank financial entities like various funds, venture capital, private equity, and cryptoassets, as this approach could jeopardize financial stability.