Speaking at a financial stability conference hosted by the Austrian Central Bank in Vienna, Klaas Knot was pressed on how to handle widening gaps in global rulebooks and risk approaches. He brought the discussion to regulatory equivalence and access across borders, saying: "If Europe really feels that some parts of the world are no longer regulatory equivalent at some point it can draw conclusions from that, the whole issue of mutual access to various markets will have to be reviewed." Knot, who is set to meet German Chancellor Friedrich Merz in the days ahead to discuss possibly succeeding Christine Lagarde at the top of the ECB, added that he still backs global standards and was not singling out any region.
Firms from the US, the UK and other major markets depend on supervisory equivalence to operate inside the EU. European policymakers have in the past flagged worries about the speed of deregulation in the US as the Trump administration cut back rules and oversight. The UK, meanwhile, spent years after Brexit obtaining only a narrow form of equivalence to EU financial rules.
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Knot previously served as governor at the Dutch National Bank and also chaired the Financial Stability Board, which urged steps like minimum haircuts and limits on leverage to rein in risks from non-bank financial institutions. He said implementation was "uneven" during his time at the FSB, and went further: "Now I'm not an official any more I can say it's poor, in many areas non-existent." He also pointed to splits on the last batch of Basel reforms agreed in 2017, especially the Fundamental Review of the Trading Book, which sets capital for banks' trading operations. The US has yet to set out how it will implement the rules, while the UK and EU have pushed back their timelines but say they will put them in place. "If you have an issue like FRTB in the banking regulation, it doesn't make sense to have international differences," Knot said, adding that "if there is a lowering of requirements in one part of the world, unfortunately you have to follow it because all the business will be gone before you know it."
If Europe starts questioning equivalence, cross-border access for financial firms could be reassessed, which influences who competes for your business and what products are available. Knot's push for consistent standards is about keeping the playing field level so activity does not simply migrate to the lightest-touch venue, a shift that can shape costs, choice and market depth for everyday investors over time.
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