LONDON, Sept 14embre (Hfrance.fr) - Banks should keep their cool in the face of pressure from the European Union to move euro derivatives clearing from London to the bloc, said Bank of England governor Andrew Bailey said on Tuesday.
Since Britain completely left the EU last December, the bloc has asked banks to move clearing the euro from London, which accounts for the bulk of in Frankfurt.
So far, banks and their customers have done common front against offshoring of compensation, claiming that it would increase costs by damaging the markets.
Bailey said banks are waiting rather than changing their euro positions as a June 2022 deadline looms when the temporary authorization for London clearers to serve customers from EU pwill end.
"The right thing to do is to wait for the moment. The cost of moving and fragmentation is too high ", Bailey said at a Bloomberg event.
"While the expectation is reasonable from a banks' point of view, it does impose on authorities responsibility for fixing the problem "said Bailey.
However, negotiations with the EU at present have failed. not been particularly intense, but the BoE was happy to give EU regulators the reassurance they need, he said.
"If they want to make the decision to break the system, then it is important to consider the financial stability risks that accompany fragmentation.
Members in the US already have EU clearance to serve customers in the bloc. "We could see clearing of euro instruments move from London to New York if this does not settle " said NatWest Bank Chairman Howard Davies, at the same event. Huw Jones report; Edited by Bernadette Baum
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