Responding to a speech given in London earlier this afternoon by Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank, Miles Celic, Chief Executive Officer, TheCityUK, focuses on the specific issues raised around transition and mutual regulatory recognition:
On mutual regulatory recognition
A regulatory framework for financial services based on mutual regulatory recognition would provide a mechanism to manage regulatory convergence or divergence. Put simply, it would enable financial services suppliers in the UK and the EU to have access to each others’ markets after Brexit – something that is in the mutual interest of customers and clients right across Europe. It is an ambitious proposal, but given the strong links that already exist between the UK and the EU, it should not simply be dismissed as impossible or avoided because it would involve substantial effort. The economics of this proposal make clear sense to achieving a pro-growth Brexit. Now the politics must start to do so as well.
It is imperative that the UK and EU create the political will to agree a deal on transition in the coming weeks, supported by all the relevant regulators. Without it firms won’t just leave the UK, there is a very high risk that they – and jobs, capital and investment – will leave Europe. A fragmented market is in nobody’s best interests and could create financial stability risks on both sides of the continent. Andrew Bailey’s recommendation earlier this week to implement an MoU between relevant regulators would be a significant step in ensuring a stable and orderly transition is effected.