Trump's Wall Street deregulation slammed by Draghi
Mario Draghi has taken the Trump administration to task, rebutting recent assertions that Germany is a currency manipulator and warning against the roll-back of post-crisis financial regulation. Speaking at a hearing of European lawmakers in Brussels on Monday, the European Central Bank president responded to the charge by US National Trade Council Director Peter Navarro and others that Germany was using a "grossly undervalued" euro to gain an unfair trade advantage.
"The ECB has not intervened in the foreign exchange markets since 2011," Draghi said, adding that Germany's trade surplus was the result of productivity gains. "Germany has a significant bilateral trade surplus with the US, a material current account surplus, but it has not engaged in persistent one-sided intervention in the foreign exchange market."
In a question-and-answer session punctuated with lawmakers' concerns over the shifts in global economic and financial policy brought about by the change of government in Washington, Draghi also hit out at Trump's moves to begin dismantling the Dodd-Frank Act. Rolling back the compendium of financial rules intended to prevent a repeat of the 2008 financial crisis would be "very worrisome", he said.
"The last thing we need at this point in time is a relaxation in regulation," Draghi added. "Frankly I don't see any reason to relax the present regulatory stance which has produced a stronger banking and financial services industry than before the crisis."
In introductory comments on ECB policy and the euro-area economy, Draghi said current stimulus settings reflect a recovery that, while performing well, isn't yet strong enough to stand on its own. (Bloomberg)