Britain must not submit to the European Union's rules on financial services to gain better access to the bloc's market after Brexit, Bank of England Governor Andrew Bailey said Wednesday.
European daily equity trading worth € 6 billion ($ 7.36 billion) left the City of London for the continent this week in the first tangible sign of the £ 130 billion ($ 176 billion) impact of Brexit on the UK financial sector. ).
Bailey said Britain should not become just a "taker" of EU rules in exchange for access.
"If the price of this is too high, we can't just go for it," he told Parliament's Treasury Committee.
"I strongly recommend not to become a regulator. If the price of that is not equivalence … then I am afraid that will follow."
Britain left the EU's internal market last week, and its new trade deal with the bloc does not cover access to the financial markets.
Britain and the EU are committed to reaching a Memorandum of Understanding by the end of March on cooperation on financial rules to enable access based on equivalence.
The EU has asked Britain about its intentions to deviate from the bloc's rules, which could make it more difficult for Brussels to grant equivalence-based direct access to the city of London.
Leaving the EU has allowed Britain to drop rules it has had to follow until now.
Bailey said Britain would not introduce a new EU rule allowing banks to deduct the value of software investments from capital requirements.
BoE Deputy Governor Sam Woods said solvency rules for insurers also needed to be reformed.
Bailey said the EU's drive to be more self-sufficient in financial services is shaping its equality decisions.
“The question is: are they going to do it? Is this when they do it? Because it hasn't happened yet in many areas, & # 39; & # 39; he said.
Bailey said equivalence should be based on the fact that Britain has regulations that produce similar results to those in the EU, rather than literally following them, which the EU has not demanded for other jurisdictions.
He said the EU's broader approach to trade in financial services with Britain appeared to be aimed at boosting less competitive financial firms in the eurozone, rather than seeking out the best financial services for businesses.
"I don't understand why people would want to shut themselves off from open markets," said Bailey.
Bailey said that between 5,000 and 7,000 financial services jobs had already left Britain for the EU – less than some forecasters had feared, although the process was not over.
He had warned in December of a possible Brexit disruption to the markets, such as the relocation of trading in equities and derivatives in euros, leaving the markets fragmented.
But he said the markets were very stable. "The markets broadly expected what they got," he said.
($ 1 = 0.8148 euros) ($ 1 = 0.7373 pounds) (Written by Huw Jones; edited by David Milliken, William Schomberg and Alison Williams)
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