Fed, ECB give welcome endorsement of financial regulation

IN the run-up to the US Federal Reserve's retreat in Jackson Hole last week, observers had expected Fed chair Janet Yellen and European Central Bank (ECB) president Mario Draghi to follow the usual routine at the annual central bankers' event and focus on core issues of monetary policy.

Thus, Ms Yellen was expected to drop hints about the Fed's outlook for inflation and the future course of US interest rate hikes, while Mr Draghi was viewed as likely to discuss the euro's recent strength and the pace of the ECB's monetary policy tapering. But instead, both focused their remarks almost entirely on the positive outcome of regulation since the global financial crisis of 2008.

This was particularly timely, given the predilections of the Trump administration in the area of financial regulation. Ever since his presidential campaign, US President Donald Trump has vowed to roll back many of the regulations put in place after the crisis. He has derided the Dodd-Frank Act - the centrepiece post-crisis legislation - as "a disaster". The administration's top officials overseeing economic policies have voiced similar views, and their ideas have started to take concrete shape.