In an address to the European Parliament, Olli Rehn, First Vice-Chair of the European Systemic Risk Board and Governor of the Bank of Finland, voiced his concerns regarding policy changes in the US as the Trump Administration takes over the federal bureaucracy, including financial regulators.
Among other policy changes, President Trump has been vocal about supporting digital asset regulation and other aspects of Fintech. He has appointed a crypto and AI czar, and the Securities and Exchange Commission has launched a Crypto Task Force. Additionally, the Department of Government Efficiencies (DOGE) has been reviewing all government agencies looking to reduce costs and eliminate unnecessary services, including slashing the number of government employees.
The CFPB, or Consumer Financial Protection Bureau, has earned significant attention from the Trump Administration, and the SEC is said to be next on the list for DOGE to review. Other agencies not engaged in financial regulation, like USAID, have experienced high-profile cuts to various programs – some of questionable intent.
In his speech, Rhen said they are watching the machinations of the Trump Adminstration with “concern.”
“The new US Administration is establishing new priorities, including significant deregulation of the financial system. This deregulation is also aimed at new sectors, such as private finance, non-bank financial intermediation, and crypto-assets. We are vigilantly assessing its implications and the potential risks to the EU financial sector.”
Private finance and Fintech, including digital assets, have been growing for years in many jurisdictions. In fact, Europe led much of the world with the approval of MiCA or Markets in Crypto Assets, seeking to provide new rules to enable crypto innovation long before Trump took over.
As for non-bank financial intermediation and private finance, it is not exactly clear which elements the banker is taking umbrage with or what is causing his worries.
Clearly, there are frictions between the new Trump Administration and the leadership of Europe, but it would be helpful if Rehn provided more details on the allegations of deregulation as opposed to cost-cutting of government services, which are profoundly needed. Perhaps the EU could benefit from a similar agency that audits the European Commission and the many different EU agencies.