UK banks are guilty of manipulating the country’s loose regulations to undercut their European competitors and should be regulated by a pan-European body, Hans-Werner Sinn, president of the Ifo Institute for Economic Research, told CNBC Wednesday.
“A single country tends to undercut the regulatory rules of its competitors so as to attract banking business, and I think the Brits have played that game for quite a while with disastrous implications for Europe and the world,” Sinn told “European Closing Bell.”
“If countries regulate their companies themselves, there is always the risk of competition of laxity,” he added, indicating the lowest possible quality standards would win out.
Sinn called for a pan-European institution to regulate the region’s banking system and suggested the European Central Bank would be the best candidate. The body would regulate the UK’s banks, under Sinn’s plans, despite not being in the euro zone.
The swipe at the UK banking sector came as Sinn highlighted the country’s role in the overall financial crisis.
“The problem arose in the United States due to insufficient regulation there and it was multiplied in Great Britain due to the insufficient regulation in Great Britain. The world will no longer accept that,” he said.
- Watch the full interview with Hans-Werner Sinn above.