FSB's Draghi says not time to pause on regulation

By Huw Jones

BASEL, Switzerland (Reuters) - Policymakers should continue pushing to make financial markets more resilient as there were still signs of fragility, Financial Stability Board Chairman Mario Draghi said on Saturday.

Some regulators have expressed concern there could be a temptation to ease efforts to beef up rules as "green shoots" of economic recovery appear.

Banks are also showing signs of returning to aggressive hiring and big bonuses, raising fears that lessons from the worst market crisis since the Great Depression are not being learnt.

"I don't think we are losing momentum...It's not time for pausing," Draghi told a news conference after the FSB's inaugural meeting.

Policymakers also needed to plan and coordinate their strategy to reverse measures taken to ease the pain of recession, such as huge liquidity injections and public stakes in banks, although it was not the time yet to implement them.

"Exit strategies ought to be credible. To be credible you have to have both the banking system repaired before you start to tighten monetary policy and you want the economy showing convincing signs of a sustained recovery," Draghi said.

American banks have raised large sums privately after depending on public money to stay afloat but the process of restructuring balance sheets generally was not yet complete.

Bank lending and securitization were still not strong enough to support a sustained economic recovery, Draghi added.