Business

Thursday 27 July 2017

Carney calls for an amicable divorce settlement for banks

Bank of England governor Mark Carney Picture: PA
Bank of England governor Mark Carney Picture: PA

Bank of England Governor Mark Carney called on Friday for Britain and the European Union to reach a sweeping deal to recognise each other's bank rules after Brexit, or risk a potentially damaging hit to financial services across Europe.

Speaking at Thomson Reuters' London office, Carney said the outcome of Brexit for financial services would be a "litmus test" for global banking rules and warned against the temptation to try to put up barriers to capital flows.

"The United Kingdom has been at the heart of the global economy for centuries. Throughout that period the City has channelled the life blood of the world economy, finance," he said in a speech. "It is all too easy to give in to protectionism, but the road less taken is often the most rewarding."

Banks, including many from the US and other countries, use London as their base for operating across the EU, making the British capital the biggest financial centre in the region by far. But their EU "passports", which enable them to operate throughout Europe from London, are set to be lost once the UK pulls out of the bloc in two years' time.

British hopes of securing a generous new deal are likely to be contested by politicians in many EU states who were jolted by the decision to leave.

Reuters

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