Jonathan Hill used his keynote speech at Global ABS in Barcelona on Wednesday to call for a revaluation of Europe’s attitude to risk. He said that a “regulatory state” had been allowed to develop since the 2008 financial crisis and accused politicians of “walking away” from decisions that ought to have fallen with their remit.
Hill, who was influential in founding the EU capital markets union, said he had "unfinished business" in promoting securitization deregulation.
“The approach you adopt on securitization determines investment, growth and jobs,” he told delegates. “I would argue the biggest long term financial stability risk that we face in Europe is lack of growth.”
Hill argued that it was impossible for regulators to entirely eliminate risk and called for an honest conversation about what level risk society wants to take in order to pursue growth. He said that was a political decision, but that it currently sat with regulators.
“Regulators do not have to live with the consequences of their decisions in a way that a politician ultimately has to do at the ballot box,” he said.
However, he did not lay the blame with regulators, saying they were being “completely rational”, given their incentives.
“I think that regulators are a decent, intelligent bunch faced with a very difficult job, who strive to do their best in line with the task set out for them in legislation,” Hill continued.
He encouraged delegates to think about relegation in context of great power competition, saying the trend towards global regulation has broken down. Europe, as a whole, ought to move towards trying to compete with the US rather than focussing on EU v UK competition.
Concluding his speech, Hill said nothing would change without thinking about society’s risk appetite and he urged delegates to take up that cause.
One senior delegate reacted positively to the speech, telling GlobalCapital, “we need to record that and replay it everywhere”.