FRANKFURT (Reuters) – Bank regulation adjusted too much, yet supervisors can still be missing risk factors which may herald your next crisis, the outgoing Dutch an affiliate the European Central Bank's Supervisory Board said on Thursday.
Banks have faced increasingly stringent rules because global financial crisis and critics debate that excessive regulation could force financial companies to use on new sorts of risks aren’t yet within the radar of supervisors.
"Sometimes, supervision goes too far," Jan Sijbrand, the Dutch central bank's top supervisor said inside of a farewell speech. "Likely to increasing lack of any consistent theoretical structure in the recent supervisory requirements which have been arriving in from all of angles."
"And they measures will probably be an ever growing extent becoming taken off the logic of sensible risk management," he added, speaking in Amsterdam.
Sijbrand argued than a not enough coordination between regulatory bodies hampered their work as different agencies were vying against each other to restrain lenders without listening enough together.
He also warned that supervision has lost momentum, becoming big and dear yet still time losing its give attention to making the sector safer. This risked missing new indications of trouble since the finiancial sector evolved.
"Throughout the last crisis, this trouble centered on asset backed securities which slipped through, between market risk control and credit risk control," Sijbrand said.
"Presently you can observe something similar with financial market infrastructures – specifically central counterparty clearing houses, falling somewhere between payment services oversight and prudential supervision," he added.
The deficiency of powers in tackling money laundering had also been a concern as fragmentation of responsibility risked creating blind spots and leaving major risks undetected, he argued.