EU warns against weakening financial regulations to prevent crisis

European financial supervisors are expressing concern over plans to simplify regulations. They warn that relaxing rules could lead to another financial crisis. Dominique Laboureix, head of the Single Resolution Board, emphasized the need to maintain strong financial protections. He stated that lowering safeguards could result in crises and hinder economic growth. The warning comes as the European Commission aims to cut back on business sustainability disclosure rules and reassess capital regulations for banks. Some central bank leaders from Germany, France, Spain, and Italy are calling for the removal of complex rules that they believe harm competition without improving stability. Laboureix wants to discuss easing regulations but insists on the importance of protecting financial stability. He referred to the 2008 financial crisis, reminding officials that it led to massive government bailouts and significant economic downturn. Frank Elderson, a vice-chair at the European Central Bank, reinforced the need for caution. He pointed out that the 2008 crisis required substantial government support and urged against complacency regarding future risks. Instead of weakening regulations, he suggested harmonizing them across all EU member states. Elderson also mentioned the importance of sustainability disclosure rules. He warned that too much simplification could leave banks without crucial data to assess climate change risks. The ECB is focused on pushing banks to address these risks, threatening fines for those that do not comply with deadlines related to climate action. A small number of banks are at risk of penalties for failing to meet these deadlines. Elderson stated that some banks have already been put on notice and could face concrete consequences if they do not take necessary actions on climate-related risks.