EU pressure should be waited out all banks, says Bank of England

Bank of England Governor Andrew Bailey said that all the Banks should hold their nerve in the face of European Union pressure to shift euro derivatives clearing from London to the bloc. Since Britain fully left the EU, the bloc has asked banks to move euro clearing from London. This has resulted in the bulk of activity, to Frankfurt. The banks and their customers have put on a united front against relocating clearing so far. This says that it would bump up costs by splitting markets.

Bailey said that the banks were waiting rather than shifting euro positions. This is when temporary permission for London clearers to serve EU customers ends. Bailey stated that the right thing to do is to wait for the moment. Since the cost of moving and fragmenting are too large. Also added that, while waiting is sensible from the point of view of the banks, this puts the responsibility on the authorities to sort the thing out. Negotiations however with the EU at this time have not been particularly intense, but the BoE was happy to give EU regulators the assurances they need.

To break the system up, if they want to make a decision, then it is important to consider the risks to financial stability that come with fragmentation. Clearers in the United States already have EU permission to serve customers in the bloc. NatWest bank chairman Howard Davies told that they could see some clearing of euro instruments switch to New York from London if this does not get sorted out.