UK City Minister Asks Regulators to Embrace Some Risk-Taking in Financial Markets

cryptonews.com:

The new minister for the City of London has called on regulators to adopt a more accommodating approach towards risk-taking in a bid to revitalize the UK’s stagnating economy.

Bim Afolami, who recently  assumed his position as part of a ministerial reshuffle , emphasized the need for regulators to strike a balance between effective oversight and allowing room for innovation and growth.

Speaking at the  Financial Times Global Banking Summit , Afolami highlighted the futility of creating overly cautious regulatory environments. 

“There’s no point having the safest graveyard. Animal spirits need to be there, we need to innovate, we need to drive growth and initiative,” he said. 

Recognizing the inherent conflict between politicians and regulators, Afolami acknowledged that while politicians must avoid short-term thinking, regulators should not seek to eliminate all risks.

He emphasized that risk, when appropriately supervised, is integral to the growth and innovation of any sector of the economy.

The UK government has been pushing for a shift in regulatory approach, aiming to promote growth and competitiveness. 

Regulators in the financial, competition, and accounting sectors have been instructed to prioritize these goals. 

Additionally, energy, water, and communications regulators are set to receive new mandates that encourage “growth.” 

Afolami, a former Freshfields lawyer and HSBC banker, highlighted the importance of making regulators more effective rather than merely reducing regulations. 

He noted that excessive reporting requirements and complex structures can hinder accountability in practice. 

David Bailey, who oversees UK bank supervision at the Bank of England, supported Afolami’s approach, emphasizing