Even on WTO rules, the EU and UK banking and capital markets could remain accessible to customers across Europe after the UK leaves the European Union, says a report by UK Finance, the association for the UK banking, payments and financial sectors.
The report – Supporting Europe’s Economies and Citizens: a modern approach to financial services in an EU-UK Trade Agreement – sets out a framework for cross-border market access that can be delivered through a trade agreement, based around three overarching principles:
- mutual recognition of regulatory approaches;
- the appreciation that different customers have different levels of sophistication; and
- a high degree of regulatory and supervisory cooperation.
Ambitious but credible model
According to UK Finance, the model offers benefits to both the UK and the EU because:
- it is based on regulatory alignment, reciprocal market access and a level playing field;
- it uses trusted mechanisms that combine existing tools used in a variety of trade agreements; and
- it also respects the desire of the EU and the UK to have the freedom to regulate and to have autonomy over legal regimes, but is flexible enough to enable countries to easily align their systems to facilitate close trading relationships.
According to UK Finance's Stephen Jones, tens of thousands of customers and billions of euros of banking and capital markets products and services are reliant on the UK remaining Europe’s most interconnected financial centre. He said: “As we near Phase II of the Brexit negotiations, we’ve designed an ambitious, credible and positive model which EU and UK policymakers can utilise to enable future trade in services between the EU and the UK.” He also added: “Traditionally services were not covered in great detail within Free Trade Agreements but there is every reason why, in an increasingly service-based global economy, an EU-UK FTA should include an ambitious and credible model for cross-border trade in financial services.”
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