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However, this argument should be about very remote - but nonetheless thinkable - risks that might crystalise in the heat of a huge crisis. After all, the “unthinkable “ happened frequently in 2007/8 so any responsible political system should carry through its commitments to global and national society to ensure its financial stability.
The scale of these markets in almost beyond comprehension: The key euro-denominated interest rate contracts cleared in the UK are more than 50 times UK GDP, and 10 times the Eurozone’s GDP. Any glitch would be dramatically de-stabilising – see my May 4th/8th blogs[1] and January paper[2]. Yet the solemn decisison by the UK people a year ago included demands to cease accepting the ultimate jurisdiction of the ECJ and to question payments felt by the EU27 to be legitimately due.
Can the EU27 now be certain beyond any doubt that – at the most dreadful moment of a crisis – the UK would allow the EU to “induce change” in a UK-based company? If the ECB were asked to provide multi-billions of euros of emergency liquidity for intra-day margin calls, can it be certain beyond any doubt that it would be repaid if the UK subsequently argued that the process was unreasonable or flawed? [...]
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