[ad_1]
The Bank of England governor has said EU demands that municipal banks comply with Brussels regulations are unacceptable, in a combative speech backing the government’s hardline stance in the next round of Brexit talks. .
Andrew Bailey said the UK should refuse to allow Brussels to restrict the way the UK industry develops and look to global financial regulators as the main rule makers.
Calling on the EU’s insistence on an equivalency regime out of line with all the other agreements signed by Brussels, the central bank director sided with Boris Johnson as the UK embarks on what is expected to be difficult talks during the next few months.
Speaking online at Mansion House’s annual dinner for finance industry executives, Bailey said the EU had granted equivalence status, a mutual recognition of each party’s regulatory standards, to Canada, the US, Australia. , Hong Kong and Brazil based on their adherence to international regulations. But he insisted that London also track the twists and turns of EU rules.
“The EU has argued that it must better understand how the UK intends to amend or alter the rules in the future,” he said.
“This is a standard that the EU does not have in any other country and, I suspect, would not agree to surrender itself. It’s hard to see past one of two ways of interpreting this statement, neither of which stands up to much scrutiny. “
Bailey said the first interpretation was that the EU thought the rules should never change, something the governor said was “unrealistic, dangerous” and inconsistent with the way the EU operated.
Instead, he favored the interpretation that the EU would only grant equivalence status if the UK agreed to change its rules as long as the EU did. “But that is taking rules, pure and simple. It is not acceptable when UK rules govern a system 10 times the size of UK GDP and it is not the test so far to assess equivalence ”.
During last year’s Brexit negotiations, the EU granted the UK financial services industry a six-month extension to the transition agreement, which ended on December 31.
City bosses are prepared for ministers to reject a deal if the EU upholds its demand that the UK not change its rules independently.
Bailey’s comments will reinforce Johnson’s position in talks to seal a longer-term deal, when the prime minister is expected to argue that Brussels is behaving unreasonably when demanding a compromise to amend the city’s regulations accordingly. with the changes to the EU rules.
Bailey said the UK should take a more global view of the City’s future and seek to participate in global regulatory bodies. He said the central bank has already provided the chairs for two of the top four regulators and this put the UK in a strong position to influence industry rules.
There was a message in Bailey’s speech to Brexiters that they would prefer the UK to go it alone, and the governor cautioned that concessions would always have to be made to create a level playing field.
“It requires us to give up some control over our standards and rules, because the alternative of tight internal control is illusory: it would jeopardize the achievement of the very things we want, safe open markets and equally open economies. Above all, these bodies allow us to build the trust that allows our financial systems to remain open, ”he said.
“But, not for a moment do we believe that we can keep the arrangements we have unchanged. As the world around us changes, we also have to adapt how we achieve these public goods.
“Furthermore, we do not participate in these global institutions with the intention of diluting them, mistakenly because we think that this would preserve some notion of our competitiveness as a nation. The UK couldn’t be a global financial center for long if we did. “
Bailey’s speech came as he found himself under pressure following a dispute over his handling of the collapse of London Capital & Finance (LC&F) in his previous job as the city’s top regulator. The evidence he gave to MPs on Monday was publicly challenged the next day by the judge who led an investigation into LC&F, Dame Elizabeth Gloster.
