Fragmentation in European banking systems: a threat to global economic resilience and regulatory unity.

The global economy is facing a crack and break, as Americans call it. Fragmentation in the European banking system has led to financial vulnerability, according to experts. Financial regulation is also facing tension due to this fragmentation. To improve economic resilience and strengthen the euro as an international currency, Europe needs political commitment and ideological and national differences among member states need to be bridged.

The Dodd-Frank Act was a significant reform for the American financial system, signed by Obama in 2010. Trump later changed the regulations to offer relief to small and medium-sized banks. President Biden has increased investor protection and stability in the system, anticipating the challenges of the upcoming election year in 2024.

Populism from both political extremes has led to neo-autarky with more regulation and uncertainty in the global economy. Leaders are deviating from international regulations to impose tariffs, limit immigration, and close their economies. This has resulted in financial and regulatory changes being made in different countries, potentially further fragmenting the financial space.

Regulation is also a challenge in the real estate sector, with new regulations seeking to limit prices in stressed areas. Owners are choosing to sell rather than rent due to these regulations, exacerbating the lack of supply in the rental market. Public housing solutions are being suggested as a way to address this issue.

The interconnectedness of economies and financial systems highlights the need for a unified approach to regulation and governance across borders to address current and future challenges facing global economic landscape with uncertainty looming ahead.

Overall, there is a need for cooperation and coordination across borders as economies face challenges such as protectionism from populist movements on both sides of politics spectrum that lead to fragmentation of financial systems leading to economic vulnerability.