Despite the volatility that would trigger the UK’s departure from the EU, Brexit does not represent an “imminent risk” to financial stability, according to Single Resolution Board President Elke König.
Confusion has taken over the British parliament. Nobody knows how the divorce between the UK and the EU will end. Instability could spread over the City of London and its financial services.
But König, who knows the situation of Europe’s systemic banks inside out expressed her confidence about the level of preparedness of the financial system.
“There will definitely be volatility”, she told reporters on Tuesday (26 March). “Volatility is never pleasant but part of business”.
But she was “convinced” that the UK’s withdrawal from the EU did not represent a “imminent risk to financial stability”.
Following the recommendation of the ECB, the SRB also insisted that those banks that want to continue operating in the EU after Brexit would have to transfer the risky part of their activities to where the supervision will take place on EU-27 territory.
The governor of the Banque de France, François Villeroy de Galhau, regards Brexit as an opportunity for Paris and European finance. But, for the smallest financial actors, much remains to be done before March 2019. EURACTIV France reports.
König said that it would not be sufficient for British-based banks just to open a branch across the Channel.
Although “complexity is an impediment” to bank resolution, König ruled out the prospect of new bank structures surging in the aftermath of Brexit to maintain a European passport posing a particular concern.
“We will just have more banks to supervise,” he added. [...]
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