President Donald Trump's plans to to ease banking regulation is raising eyebrows in Europe.
Trump has asked the U.S. Treasury Department to submit a report on possible changes to Dodd-Frank – the set of rules established in the wake of the 2008 financial crisis to clamp down on banks risk-taking. Other banking rules, including the Basel III international framework seem to be on hold since the new administration came in.
Mark Carney, governor of the Bank of England, said Friday that G-20 countries should not fall into "reform fatigue".
Carney, who is also Chair of the global financial industry watchdog the Financial Stability Board, wrote in a letter sent by the FSB to the G-20 finance ministers that "a decade after the start of the crisis, an element of reform fatigue is understandable.
"But giving into it would mean that essential standards are neither completed nor fully implemented."
A European official working in banking regulation, who asked to remain anonymous because of the sensitive state of legislation, told CNBC that the world was close to finishing the Basel III regulation last January, until the new administration arrived in the U.S. and delayed the expected conclusion of the process.
The U.S. needs to appoint a new Federal Reserve official for banking supervision, which is expected to happen only next month. Until then, the Basel III committee is not aware of the official position from the U.S.
President Trump has said that banking regulation does not allow lending to the economy to take place.
Without the U.S.'s approval for Basel III, it is unlikely that Europe will accept the rules. The aim of the regulation is to ensure a level playing field for banks independently of their geographic operations.
Shortly after the election of Donald Trump, Daniele Nouy, the European Central Bank's chief for supervision, stressed that "Basel III should be finalized."
"How can banks plan for the future when they do not know what rules they will have to comply with? Regulators must therefore provide regulatory certainty," she said in mid-November.
An international economic official, who also asked to remain anonymous, told CNBC that the rollback in financial regulation was a "concern" and that it is a "real danger."
"People have short memories and seem to have forgotten how bad things got (during the crisis,)" the European banking official said.
Meanwhile The German finance minister, Wolfgang Schaeuble, said Friday that the world's top economies are not concerned that regulations would be rolled back. These are needed to ensure stability and cancelling them could lead to a new financial crisis, Reuters reported.