Bank of England Governor Mark Carney said the UK already had a "hard touch" regime in relation to bankers' pay and criticised the EU cap on bonuses.
Mr Carney said the cap would partly reverse the changes that have been made to be able to recover bonuses from bankers.
It takes back some of the advantages of the approach that we have had because it will incentivise more cash compensation today - exactly the type of problem we had before - that we can't claw back.
We would rather see more deferral, more equity [share-based payout] and this ability to take it back when those risks come to light.
He also denied the suggestion that regulators had "dropped the ball" over bankers' pay.
More top news
American Chynna Deese, 24, and 23-year-old Australian Lucas Fowler were found shot dead a week ago.
Brexiteer Priti Patel set for cabinet return as the new Tory leader shapes his top team.
The findings relate to all types of fish.