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Carney warns regulators not to backtrack on banking reforms

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Bank of England governor Mark Carney has warned world leaders not to roll back regulatory reforms to the banking sector.

Unwinding measures introduced since the financial crisis could have an impact on global growth, Carney wrote in a letter to G20 leaders ahead of a meeting later this week.

Carney’s comments, made in his capacity as chairman of the international Financial Stability Board, were seen as a riposte to those made by President Trump and his team that suring up banks’ balance sheets would be a barrier to growth.

Carney warned that caving to “reform fatigue” could hamper international regulatory cooperation, reduce competition and hit the cost of funding and dampen investment flows.

Carney wrote: “The net result would be less and more expensive financing for households and businesses, and very likely lower growth and higher risks across the G20.”

Carney praised the steps made by banks to raise more than $1.5trn (£1.16trn) in capital since the crash and said regulation has reduced the risks of the “shadow banking” sector.

“G20 reforms have now addressed the fault lines that caused the global financial crisis,” Carney wrote. “The financial stability risks from the toxic forms of shadow banking at the heart of the crisis no longer represent a global stability risk.”

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Image courtesy of Stuart Miles at FreeDigitalPhotos.net

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