The term “deregulation” is increasingly prevalent among global policymakers, with a common narrative about cutting through the bureaucratic red tape that supposedly stifles competition. Since the 2008 financial crisis, financial institutions have been operating under a dense regulatory framework designed to mitigate risks and uphold financial stability.
According to Corlytics, today, this regulatory net is widening to include elements like ESG reporting, operational resilience, and AI, sparking a call for what some might dub a regulatory “Ozempic” – a rapid slimming down of regulatory frameworks without compromising their foundational goals.
In the United States, the Trump administration has actively pursued deregulatory initiatives. Since January 20, 2025, a “regulatory freeze” has been in place, pausing all rulemaking across federal agencies pending review by newly appointed agency heads.
This is part of a broader strategy that includes a new “10-to-1” deregulatory rule, requiring agencies to eliminate ten existing regulations for every new one created, expanding upon the previous “two-for-one” mandate. This aggressive rollback includes revisiting the SEC’s proposals on climate-related disclosures and adjustments to the Basel III Endgame rules, indicating a sustained push toward deregulation that may significantly reshape regulatory oversight in the long term.
Across the Atlantic, the European Union is also streamlining regulations. Mario Draghi’s September 2024 report on European competitiveness has catalyzed the EU’s drive towards regulatory simplification. The EU aims to “simplify, consolidate and codify legislation” to avoid overlaps and contradictions, as stated in the Political Guidelines for the 2024-2029 European Commission.
In a tangible move, the Commission introduced the Omnibus Package in February 2025, proposing significant amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the Taxonomy Regulation, which would decrease the number of firms under the CSRD scope and ease the CSDDD due diligence requirements.
Similarly, the UK is aligning with this trend of deregulation and simplification. The Treasury’s March 17 policy outlines a new regulatory approach aimed at reducing complexity and fostering economic growth. Notably, the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) have committed to cutting down on regulatory reporting demands.
Additionally, the government plans to dissolve the Payment Systems Regulator (PSR) by transferring its functions to the FCA and to liberalize the bank ring-fencing regime introduced post-financial crisis to safeguard retail banking from global market fluctuations.
While deregulation may seem beneficial by reducing the compliance burden, it carries risks that might outweigh these advantages. Decreased regulation can lead to gaps that foster ambiguity and increase complexity, especially as nations prioritize competitive advantage, potentially leading to greater global regulatory divergence.
Furthermore, regulatory changes, particularly those affecting ESG and AI, have broader societal implications that must be navigated carefully. As such, any deregulation efforts should be approached with a structured and considered strategy to ensure ongoing financial stability and societal welfare.
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