Financial markets and economists have been spooked this year by moves from Donald Trump's U.S. administration to ramp up tariffs on countries such as China.
"We are all aware that an escalation of protectionist threats from the United States would dampen growth everywhere," Villeroy de Galhau, who is also governor of the French central bank, said at the City Week banking conference in London.
"The recent uncertainty is probably already having some negative effects on investment: you saw it in the British economy since the Brexit vote in 2016. And real tariffs would hurt more."
He added that according to the Banque de France's calculations, a 10 percent increase in tariffs would cut world trade by double digit figures, and wipe more than 2 percent off global GDP, starting in the United States.
"We Europeans, shoulder-to-shoulder with Canada, Japan and others, must resolutely defend international economic relations based on commonly respected rules and multilateral institutions," he said.
Villeroy de Galhau also warned that diluting financial rules would pave the way for the next financial crisis, and that all countries should fully implement the full suite of the Basel global bank capital rules finalised last December.
"Neither the United States today, nor the United Kingdom tomorrow, should take the path of unilateral deregulation, and we welcome their commitment," he said.
U.S. President Donald Trump has ordered American regulators to ease banking rules to encourage more lending, while pro-Brexit lawmakers in Britain have said financial rules could be eased to maintain London's competitiveness as a global financial centre.
"We have to strive to maintain the collective rules of the game," he added. "Some actors may be tempted to have short memories and forget the lessons of the crisis."
The ECB holds its next policy meeting on Thursday. The bank is expected to wind up its 2.55 trillion euro (2.23 trillion pounds) stimulus programme this year. Villeroy de Galhau made no comment on monetary policy on Tuesday.
He did take aim though at cryptocurrencies. Villeroy de Galhau said "internationally harmonised answers" were needed to deal with risks from digital currencies like Bitcoin.
"In particular, we should work on exchanges and platforms which provide services at the interface between crypto-assets and the real economy," he said.
The Group of 20 Economies (G20), however, was unable to find consensus in March on global action on cryptocurrencies when it met in Argentina, opting instead to simply monitor the sector given differing national measures being taken.
(Reporting by Marc Jones; editing by Huw Jones and Susan Fenton)
By Marc Jones and Huw Jones
