EU panic: Brussels announces ‘urgent’ overhaul as bloc loses access to London after Brexit

EU panic: Brussels announces ‘urgent’ overhaul as bloc loses access to London after Brexit

Eurocrats want to end the European Union’s reliance on the City of London after Britain’s transition from the bloc’s rules expires at the end of the year. The proposals hope to give the EU market “strategic autonomy” when the UK quits the single market on December 31. It is also hoped a bolstered capital market will help firms bounce back as the bloc’s economy emerges from recession caused by pandemic lockdowns.

European Commission vice-president Valdis Dombrovskis said: “The strength of our economic recovery will depend crucially on how well our capital markets function and whether people and businesses can access the investment opportunities and market financing they need.”

He added: “The EU is having one of the most open financial systems in the world. We remain open for financial services with the US and we remain open for financial services in the UK.

“This is particularly important in light of Brexit, as Europe’s biggest financial centre is leaving the single market.”

Brussels has been attempting to increase access to capital markets since 2014.

But now the Commission believes Brexit and the coronavirus crisis will give the efforts a welcome boost.

“Brexit has made it more urgent,” Mr Dombrovskis told reporters at a news conference in the Belgian capital.

“There are specific risks, which we are seeing with so much financial activity moving out of the EU.”

He conceded the EU’s dependence on financial centres outside the bloc was “one of the reasons why we are developing capital markets”.

Commission officials have claimed they will need political support from member states to help drive through the reforms.

Their plans include the creation of a Capital Markets Union – to help companies refund themselves using the stocks and bonds market.

Digital finance reforms are also expected to play a key role in the effort, including new measures to regulate crypto assets.

The first set of rules for supervising providers of cloud computing-based services will also be implemented as banks outsource more crucial information technology.

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But the strategy was still criticised by experts, who suggested the EU has not shown enough forward thinking.

“There is a lack of vision for CMU on where we want to get to in 10 years’ time, and on how to consolidate the hopelessly fragmented and expensive investment funds market,” said Karel Lannoo, chief executive of Brussels think-tank CEPS.

Pablo Portugal, managing director for advocacy at banking and markets industry body AFME said it was time that policymakers delivered on CMU.

Published at Thu, 24 Sep 2020 14:13:00 +0000