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30 March 2021, 17:01

BoE clamps down on EU relocations

The Bank of England in London's financial district on January 8, 2021.
The Bank of England in London's financial district on January 8, 2021.

LONDON, 30 March (BelTA - China Daily) - The Bank of England, the central bank of the United Kingdom, has requested that lenders first seek its approval before they move jobs or operations away from London to the European Union.

The central bank has become increasingly concerned that European regulators are asking for more financial services than is necessary to relocate post-Brexit, according to a report in the Financial Times on Monday.

Without disclosing where it got its information, the finance paper reported that the Bank of England, or BoE, had received what it considered to be an "excessive" number of requests from the European Central Bank, or ECB.

The newspaper's source said the BoE governor Andrew Bailey had taken a personal interest in the issue.

UK regulators are concerned that Brussels may attempt to force financial trading worth trillions of pounds to relocate following Brexit and under the pretense of supervisory necessity.

Bailey said last month that any steps that forced the relocation of euro derivatives clearing away from the UK would represent a "serious escalation".

The BoE's demand that lenders request approval to relocate financial services may antagonize the EU side as delicate political negotiations continue around future cooperation. The FT reported that the BoE's new stance has been criticized as regulatory "overreach" by international bankers.

Officials from both sides have been in discussions about the future of financial services since the City of London lost its pre-Brexit access to EU markets after the UK left the single market and customs union.

The UK is seeking an equivalency system that would allow the EU to recognize UK financial rules as equivalent to its own and vice versa. UK financiers would then be able to continue operating in the European markets that they lost access to after the UK separated from the EU.

Britain and the EU last week reached an agreement on cooperation, though the EU has still not indicated whether it will grant "equivalence" status to UK finance regulations.

"Formal steps need to be undertaken on both sides before the Memorandum of Understanding can be signed but it is expected that this can be done expeditiously," the UK Treasury department said in a statement.

"The MoU, once signed, creates the framework for voluntary regulatory cooperation in financial services between the UK and the EU. The MoU will establish the Joint UK-EU Financial Regulatory Forum, which will serve as a platform to facilitate dialogue on financial services issues."

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