Ex-President Donald Trump’s campaign for comprehensive financial deregulation in America is taking center stage, not just because of the potential to transform American finance but also because of its likely international implications. With much of his rich donor base supporting these reforms, the repercussions could be similar to—or even greater than—the worldwide implications of the 2008 financial crisis.
Trump’s administration is now actively unwinding rules in different areas such as banking, fintech, and cryptocurrencies. It aims to build a deregulated financial environment to enable more profitability and risk-taking by billionaires and financial institutions. Trump has already initiated steps to fill important positions in financial regulator agencies, indicating movement towards policies that would benefit big corporations and lower accountability.
The crypto-finance space is one of the most prominent areas impacted. Deregulation would enable big tech companies such as Elon Musk’s enterprises to access financial markets more easily without the need for conventional banking laws. Musk, who has long been vocal about his ambitions to minimize financial regulations, would immensely benefit from the changes, and his businesses may extend into market spaces such as trading and margining funds.
This trend of deregulation is also unnerving in global financial markets. The U.S. is regarded as a world financial leader, and policy changes there may encourage other countries, especially Europe and Asia, to do the same in order to stay competitive. Already, European bankers have indicated they need to relax their regulations due to American policies for fear of falling behind globally if they do not.
The international implications of the policies are staggering. The crash of 2008, which was caused by deregulation in the late 1990s, is a painful reminder of the dangers. Trump’s policies may release even more risk-taking speculation, with the risk of another crisis. The big banks, already registering record profits, are demanding even fewer restrictions, with the aim of boosting their profits by taking even greater risks.
There is also growing alarm regarding the cryptocurrency market, which is mostly unregulated. Deregulation would only further fuel problems regarding fraud and money laundering, which have long tormented the industry. Critics warn that the unhinged growth of these industries can set off a collapse that will decimate not only the U.S. economy but worldwide markets as well.
As Trump’s deregulation agenda accelerates, economic analysts caution about the long-term risks of such measures, which would result in increased global financial instability. With billionaire supporters such as Musk and individuals from major financial institutions advocating for such reforms, the world waits anxiously as the U.S. may lay the groundwork for another financial crisis.
