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Trump threatens another Global Financial Crisis – expert

February 8, 2017 Business News No Comments Email Email

US President Donald Trump’s plan to roll back banking regulations introduced in the wake of the 2008 Global Financial Crisis (GFC) could trigger another worldwide crisis in the banking and financial sector according to an expert at the University of Sydney Business School.http://www.seychelles.travel/

Associate Professor Eliza Wu, a banking sector specialist, says that “while investors may be happy about the proposed deregulation, the future prospects for global financial stability are not great as President Trump sows the seeds of the next global financial crisis”.

The US President is expected to relax previsions of the Dodd-Frank Act which reduces the banking sector’s exposure to risky financial products.

“There is currently much uncertainty regarding banking regulatory reforms around the world with repeals of the Dodd-Frank rules in the US and last month’s delay in finalizing new Basel 3 rules by the Basel Committee for Banking Supervision,” said Dr Wu.

“This is increasingly putting pressure on national prudential regulators to maintain and impose their own regulatory standards,” she said. “This is worrying as a level playing field for banks operating around the world is critical for achieving global financial stability.”

“When the playing field is not level, banks will respond by ‘rushing to the bottom’ and shift their operations to places where the regulation is less stringent (ie. US and Europe if the large global banks get their way).”

“Places like Australia that are doing their best to maintain high regulatory standards as recommended by the 2014 Financial System Inquiry, will inevitably lose out with increasingly less competition in the domestic banking sector,” Dr Wu concluded.

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