The new minister for the City of London has said UK regulators need to be more comfortable with risk-taking by companies. Bim Afolami, who was promoted in a ministerial reshuffle this month, said on Tuesday regulators “need to realise that if you’re regulating a market, in any area, there’s no point having the safest graveyard”. “Animal spirits need to be there, we need to innovate, we need to drive growth and initiative,” he told the Financial Times Global Banking Summit, adding this needed to be balanced with effective regulation. The comments came as the government pushes regulators to promote growth in an effort to breathe life into the UK’s flatlining economy, reversing a trend of tighter supervision since the 2008 financial crisis. The financial, competition and accounting watchdogs have all been ordered to promote the UK’s growth and competitiveness. The energy, water and communications regulators are also set to be given a new remit to encourage “growth”. Afolami, a junior minister in the Treasury, said there was “a natural and perfectly acceptable conflict between politicians and regulators” because they had different incentive structures. While politicians needed to avoid short-term thinking, watchdogs should not try to remove all risk, he said. “Risk, as long as [it’s] watched and supervised and maintained, is integral to the growth and innovation of any part of the economy,” said Afolami. The former Freshfields lawyer and HSBC banker said his agenda was not just about removing regulation but making regulators more effective. “A lot of this is actually simplifying, not deregulating,” he said, adding that the long list of bodies that some regulators must report to could sometimes make them less accountable in practice. Afolami, who became an MP in 2017, said his three priorities in the role would be implementing a series of previously announced reforms to the UK’s capital markets, improving the country’s regulatory structures, and promoting ownership of companies by ordinary people. A “broader set of reforms” to encourage people to take stakes in companies would follow chancellor Jeremy Hunt’s announcement last week that he would explore selling some of the government’s stake in NatWest to the public, Afolami said. Many young people “don’t feel that they have as much of a stake in society as previous generations did”, he added. Afolami said he wanted cryptocurrency businesses to operate in the UK despite the warnings of the former FCA chair Charles Randell that fraud “is a feature, not a bug” of much of the industry. “It’s really important that we don’t tar every crypto business as being like FTX or Binance,” said Afolami, referring to leading crypto exchanges that respectively collapsed and paid $4bn to settle a US criminal investigation. The government’s plan to bringing crypto groups into the UK’s regulatory net would give parliament “more comfort”, Afolami said. He added that he supported last month’s decision by financial regulators to end the cap on bankers’ bonuses and added that he would not be taking measures to monitor pay in the sector.