The head of France’s central bank has expressed significant concerns regarding the Trump administration’s ongoing initiatives aimed at financial and environmental deregulation, labeling them as “dangerous” for both banks and various financial services, including asset management and cryptocurrencies.
Francois Villeroy de Galhau, Governor of the Bank of France, articulated his apprehensions during an interview with the French financial publication Alternatives Économiques, which was released on Saturday. He emphasized that the present wave of deregulation in the United States poses a substantial threat to financial stability.
Concerns over financial stability
Villeroy de Galhau highlighted the potential risks that such deregulation presents, particularly for non-bank financial entities. He noted that this shift diverges notably from the European Union’s approach, which seeks to streamline regulations while upholding the principles of financial stability and supporting climate transition efforts.
“The current wave of U.S. deregulation is dangerous,”
he stated. “The European simplification drive maintains the objectives of financial stability and climate transition.” This comparison underscores the contrasting regulatory philosophies between the U.S. and Europe, especially in critical areas like environmental disclosure.
Impact of climate change initiatives
In addition to his commentary on deregulation, Villeroy de Galhau discussed the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), a voluntary coalition that aims to engage central banks in combating climate change. He pointed out that the U.S. Federal Reserve’s departure from the NGFS occurred earlier this year, just prior to Donald Trump’s return to the presidency.
“The Fed joined us under Biden; it is leaving us under Trump,” Villeroy de Galhau remarked, stressing the importance of continued cooperation among central banks. He added, “We will of course continue: the enthusiasm of this ‘coalition of the willing’ is needed more than ever.”
Furthermore, the Governor hinted at potential changes within the European Central Bank (ECB), suggesting that a reduction of the deposit rate to 2 percent could be anticipated by the summer.