Europe must avoid excessive regulation and could also consider simplifying existing rules, European Central Bank Governing Council member Fabio Panetta said on Wednesday.
Addressing the steering committee of Italian Banking Association ABI, Panetta said it was important to see the first actual steps the U.S. administration would take after it called for de-regulation in banking and for making crypto assets more mainstream.
"The United States are preparing to de-regulate, possibly too much, and Europe keeps regulating, possibly too much," Panetta said.
Were the United States to embrace wide-ranging de-regulation Europe should avoid doing the same. However, it should also consider simplifying its existing set of banking regulations, Panetta said, adding he had written to the European Commission with three other central bankers on the topic.
"Excessive regulation should always be avoided, all the more so if the world starts going in a different direction because it would engender a competitive disadvantage (for European lenders)", he said.
"Given existing rules, we need to assess all options to simplify them and make life easier for market participants," he added.
Panetta expressed concerns about a recent U.S. presidential order allowing traditional banks to operate on crypto trading venues.
"More than an 'allowing' it sounds like an 'urging'," Panetta said. "I'll remind you that all the disasters that have happened so far in the crypto world did not involve the banks because so far these two worlds have been kept, very wisely, separate."
Turning to monetary policy, Panetta said the main downward risk for euro zone inflation came from the weakness of the bloc's economy, where a consumer-driven recovery the ECB had expected had not materialised.
"The signs of weakness in the euro zone economy are more persistent than we had anticipated," he said.
Upward risks come instead from energy prices but at the moment the expectation is that inflation is trending towards the ECB's 2% target.
