LONDON: A British exit from the European Union would damage the bloc’s plans for a capital markets union (CMU) designed to channel more cash into the economy, a leading EU regulator told the Reuters Regulation Summit.
Britain votes on June 23 on whether to remain a member of the EU, but as the region’s biggest financial center, London is expected to play a central role in the CMU and be one of its biggest beneficiaries.
The CMU seeks to enhance the ability of markets to raise funds for companies, such as by reviving securitization or asset-backed market, and thereby reduce the region’s heavy reliance on bank funding.
“The capital markets union and the single market is all about size,” Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA), told the summit.
“From that perspective, it’s extremely important that the UK remains and contributes to the capital markets union and the single market,” Maijoor said.
“If the biggest capital market of the EU would not be part anymore of that CMU, obviously that would be detrimental and be a negative impact on the CMU, both for the UK as for the remaining financial markets,” Maijoor said.
On Monday, Bank of England Deputy Governor Andrew Bailey told the summit that London had no “God-given” right to remain a top international financial center if Britain left the EU.
Supporters of Brexit have said that London would remain a major financial center outside the bloc.
Maijoor also said securities regulators were holding talks about how to prepare for a potential British exit.
“We are looking at what’s happening in financial markets in the run up to the referendum, and this includes looking into currency markets, which have been affected,” Maijoor said.
Supervisors are watching how sterling is being affected by opinion polls, he said.
Sterling hit a 2-1/2 week high against the euro on Wednesday after a poll showed support for Britain to stay in the EU had risen to its highest in three months.
“We are also doing scenario planning, how could this impact securities markets, and we are discussing this with my board members,” Maijoor said.
Adam Farkas, executive director of the European Banking Authority, ESMA’s counterpart for the banking sector, told the summit the referendum was also being discussed by its members.
“What we are looking at is what the different outcomes would mean for integrity of the single market in banking in Europe,” Farkas said.
“We try to provide a platform, a table for the EU supervisors to discuss how they are preparing and how they are trying to ensure that banks are prepared for any eventuality. There is no sense of panic or complacency.”
The European Banking Authority is based in London and would have to relocate if Britain voted to leave the EU.
Britain votes on June 23 on whether to remain a member of the EU, but as the region’s biggest financial center, London is expected to play a central role in the CMU and be one of its biggest beneficiaries.
The CMU seeks to enhance the ability of markets to raise funds for companies, such as by reviving securitization or asset-backed market, and thereby reduce the region’s heavy reliance on bank funding.
“The capital markets union and the single market is all about size,” Steven Maijoor, chairman of the European Securities and Markets Authority (ESMA), told the summit.
“From that perspective, it’s extremely important that the UK remains and contributes to the capital markets union and the single market,” Maijoor said.
“If the biggest capital market of the EU would not be part anymore of that CMU, obviously that would be detrimental and be a negative impact on the CMU, both for the UK as for the remaining financial markets,” Maijoor said.
On Monday, Bank of England Deputy Governor Andrew Bailey told the summit that London had no “God-given” right to remain a top international financial center if Britain left the EU.
Supporters of Brexit have said that London would remain a major financial center outside the bloc.
Maijoor also said securities regulators were holding talks about how to prepare for a potential British exit.
“We are looking at what’s happening in financial markets in the run up to the referendum, and this includes looking into currency markets, which have been affected,” Maijoor said.
Supervisors are watching how sterling is being affected by opinion polls, he said.
Sterling hit a 2-1/2 week high against the euro on Wednesday after a poll showed support for Britain to stay in the EU had risen to its highest in three months.
“We are also doing scenario planning, how could this impact securities markets, and we are discussing this with my board members,” Maijoor said.
Adam Farkas, executive director of the European Banking Authority, ESMA’s counterpart for the banking sector, told the summit the referendum was also being discussed by its members.
“What we are looking at is what the different outcomes would mean for integrity of the single market in banking in Europe,” Farkas said.
“We try to provide a platform, a table for the EU supervisors to discuss how they are preparing and how they are trying to ensure that banks are prepared for any eventuality. There is no sense of panic or complacency.”
The European Banking Authority is based in London and would have to relocate if Britain voted to leave the EU.
