Location of Central Counter Parties (CCPs)

04 March 2015

ECJ decision avoids the main issue but pits the UK directly against the Euro area – the worst possible outcome.

Ultimately, this case is about the independence of the ECB in conducting the monetary policy of the euro area – not about politics, the single market or the convenience of commercial operators. So the risk remains of an end-result that could be the worst possible outcome for political relations between the UK and the euro area: the UK may be out-voted by a bloc vote on a subject that it argues is fundamental to the single market applying to all 28 states. However, is there any need to decide before a Brexit referendum?

What next? The ECB has a right of appeal on a point of law but it would be well advised to tackle this problem head on and seek a change in its Statute if it wishes to pursue this policy. Such a change requires:

• The unanimous agreement of the Governing Council – the Governors of the euro area central banks. It must be assumed that was given at the time of the original decision, so will be maintained.


• The agreement of the European Commission. It is likely to be very wary of any action to undermine the independence of ECB at this delicate juncture of the recovery of the euro area economy and financial system, despite possible sympathies with UK’s arguments about maintaining the single market, and the politics of heightening the risk of Brexit.


• A Qualified Majority Vote by Council. Again, the euro members would be very wary of undermining the ECB’s independence. What might be next on the list? If the euro area votes en bloc, it has a QMV in a standard QMV vote as its 19 members are more than 55% of the states and 68% of the population, so above the required 65%. (Rather surprisingly and on a first reading of notoriously complex voting rules, it seems as though even `states with a derogation’ (so including the UK) have a vote on this)


• The assent of the European Parliament is also required. There is no reason to expect the Parliament to try to undermine the ECB.

The full analysis piece and conclusions are available to consultancy clients.

ECJ's press release

© Graham Bishop