During a Feb. 6 hearing in the European Parliament, the head of the European Central Bank issued a dire warning about President Trump’s latest moves to repeal Dodd-Frank’s Wall Street reforms.
The regulations President Trump wants to deplete are aimed at keeping “too big to fail” banks from sparking a repeat of the 2007-2009 financial crisis.
“Frankly, I don’t see any reason to relax the current regulatory stance which has produced a much, much stronger banking – and, generally, financial services – industry than we used to have before the crisis,” said Draghi.
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He added that more clarity was needed on what exactly President Trump plans to do pertaining to deregulation. On Friday, Trump directed the U.S. Treasury to look for potential changes in the law’s provisions.
The European leader also responded to the scathing allegations set forth by Trump’s head of the National Trade Council, Peter Navarro…
Draghi Defends Germany
Navarro claimed that Germany is using what he called a “grossly undervalued” euro to “exploit” its trading partners in an exclusive with The Financial Times on Jan. 31.
Draghi fiercely rejected these claims.
“[Germany] has not engaged in persistent, one-sided intervention in foreign exchange markets,” claimed Draghi. “We are not currency manipulators,” he added.
Draghi argued Germany’s large trade surplus was based on economic competitiveness, not currency advantage.
In fact, German politicians and German members of the ECB’s board have agitated in vain for a higher interest rate policy that would likely have strengthened the euro, VOA reported on Feb. 9.
Draghi claimed that ECB implemented a stimulus that actually lowered the euro, and those policies were carried out solely to boost the lagging economy in Europe, not for currency advantage.
“The monetary policies that we have conducted reflect the different stage of the cycle in the Eurozone and the United States,” said Draghi.
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