(Bloomberg) -- Financial regulation has gone far enough and there may be room to simplify some rules, Denmark's central bank governor said.
“I'm not in favor of further detailed regulation,” Lars Rohde said in a speech on Tuesday in Copenhagen. “And perhaps we should consider whether the fence poles are in the right place or whether we have fenced in some areas too much.”
Prime Minister Mette Frederiksen, a Social Democrat, won the June elections in part by promising to fight corporate greed and to impose tougher rules on the financial sector.
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Rohde also criticized Denmark's financial sector, highlighting a number of recent controversies, including a money laundering scandal at the country's largest lender, Danske Bank A/S. In his speech, which was held at the annual meeting of industry group Danish Auditors, he noted that the general public's trust in the financial sector is low.
Recent regulation, including the European Bank Recovery and Resolution Directive and Basel III, “have been necessary because there were insufficient incentives to ensure that the financial sector behaved,” Rohde said.
Still, “we cannot and should not regulate all aspects of the financial sector in detail to prevent things from going wrong,” the governor said. “It would simply not be possible to formulate such rules and it would also be virtually impossible to observe them. The banks' managements must have a certain degree of freedom to run their businesses.”
--With assistance from Morten Buttler and Frances Schwartzkopff.
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
To contact the editors responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net, Nick Rigillo
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