MNI BRIEF: Vital To Resist Bank ‘Regulatory Fatigue’ -Lagarde

It is vital that policymakers resist “regulatory fatigue” and redouble their efforts to extend stronger rules to non-banks with significant links to the banking sector and not the other way around, European Central Bank president Christine Lagarde said in a speech on Friday. 

Extending the supervisory spotlight to non-banks would benefit monetary policy too as central banks would not be seen as “the only tool to get in all of the cracks and rein in financial exuberance,” she said.

“That would be a suboptimal outcome, one that potentially constraints central banks’ full freedom to defend price stability.”

However, after a decade of adding regulation to banks after the 2008 financial crisis, “this is a good moment to take stock and assess how regulation can be simplified to avoid duplication and unnecessary burdens on financial institutions.”(See MNI INTERVIEW: Coordination Needed On Non-Banks-Irish Deputy)