In recent months, it has become ever more apparent that the effects of the economic crisis in Europe would force changes in the regulatory structure of the EU that are quite distinct from those agreed globally at G20 level. At the most operational level, this is manifested in policies such as bans on short-selling. At a higher level, potential deviations in the provisions of CRD IV from Basel III, or EMIR versus Dodd-Frank on derivatives, illustrate the risks. But there is now a clear move to change the Treaty on European Union in ways that may have incalculable consequences as it unfolds in the firmament of the developing crisis.
For the London-based financial services industry of the EU, there may be other implications. It now seems widely accepted that the decision of the British Conservative Party to leave the EPP family in the European Parliament has reduced the specifically British influence in the financial services arena just as the power of the Parliament rose sharply as it acquired full co-legislator status with Council. The diminished influence of the British Government in the Council now seems to be surfacing – with the debate on key aspects of EMIR likely to be illuminating, as well as the UK decision to sue the ECB for alleged discrimination in the application of rules about the location of clearing services that access ECB central bank money.
As a non-member, the UK Government has carefully stood aside from the euro crisis and stated that it wishes to see the crisis happily resolved. In the heat of the moment, some recent comments have attracted widespread attention in the eurozone: George Osborne “ratcheted up the pressure …declaring they have just six weeks to find solutions [to save the euro]”; William Hague: "The euro is a burning building with no exit". British influence in the EU may now be locked into a downward spiral but the proposed Financial Transaction Tax (FTT) has the undoubted capacity to accelerate and deepen the schism.
For the remaining overview and the pdf of the monthly please see the attached document.
© Graham Bishop
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