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EU Economics

EU in shocking power grab as it tries to curb central banks post Brexit

THE EUROPEAN Union (EU) is threatening to prevent member states from working with British finance firms as the UK counts down to exiting the bloc.

The ESMA is looking at Central Bank curbs GETTY          The ESMA is looking at Central Bank curbs


And they are proposing to implement “limitations” on central banks across the remaining 27 states as they continue to power grab.The EU’s European Securities and Markets Authority (ESMA), based in Paris, says it is against “competition” as it prepares to release its new rules and regulations before the summer.

New rules which are being packaged under the “Capital Markets Union” (CMU) will clamp down on European-based finance firms in a post Brexit environment.

Commission vice-president Valdis Dombrovskis

The watchdog says it wants to stop a “race to the bottom” and will implement far-reaching rules which financial institutions, including central banks, will have to follow.ESMA chairman Steven Maijoor said: “This work is aimed at avoiding competition on regulatory and supervisory practices between member states, and a possible race to the bottom, which might be detrimental to the capital markets union.”Noting the EU is keen to put blocks in place they are also looking at broker-dealer trading arms of banks in Britain and added there would be “potential limitations to outsourcing and delegation”.

Carl-Ludwig Thiele, Member of the Executive Board of the Deutsche Bundesbank holds the new 50 Euro banknoteGETTY               Carl-Ludwig Thiele, Executive Board member of the Deutsche Bundesbank with the new 50 Euro note

At a speech Mr Maljoor added the ESMA will publish four “opinions” or formal guidance to the bloc’s national securities regulators before the summer, covering general issues and three market sectors.It comes at a time when the EU wants to give itself more more power to mandate debt sharing practices.The proposals, according to the EU, state “shareholders and buyers of corporate debt rarely go beyond their national borders when they invest” adding the plan is to “set out a programme of 33 actions and related measures”.

Commission vice-president Valdis Dombrovskis added: “Most notably, we must devise and implement this [CMU] programme at a time when our largest capital markets hub is leaving the single market.”London has traditionally pooled and managed liquidity from across Europe, and provided most of the financial risk management to the rest of the continent.“The prospect of Europe’s largest financial centre leaving the single market thus makes our task more challenging, but all the more important.

“The rest of the EU economy needs bigger and better capital markets more than ever to complement bank lending with other sources of funding.

“We therefore need to redouble our effort to build the functioning Capital Markets Union across the EU-27.”
http://www.express.co.uk/finance/city/794264/Brexit-power-grab-central-banks-EU-markets-directive-Capital-Markets-Union

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