The Bank of England asks the EU to avoid financial chaos after the Brexit | Economy

The Bank of England asks the EU to avoid financial chaos after the Brexit | Economy

Mark Carney agreed to extend his term as head of the Bank of England, largely because of professional pride. The possibility of going down in history as the person in charge of the new regulatory framework after Brexit, against which it manifested itself at the time, ended up overcoming its reluctance. Converso for the cause, has decided to use the institutional weight and the credibility of the British central authority to double the pulse to Brussels. London is the main European financial market and one of the most important in the world.

While the Government of the United Kingdom has already announced its intention to recognize European intermediaries (the so-called CCPs, which cushion the credit risk assumed by the parties in a derivative contract and the fulfillment of the contract in case one of the parties fails to comply ) and grant a three-year extension to the financial companies of the continent, the community authorities have not yet announced anything similar.

"If the European authorities refrain from acting on this matter, the contracts of EU intermediaries with their British counterparts must be closed or transferred before March 2019," warns the Bank of England Financial Policy Committee, published on Tuesday. . The need to transfer those contracts, which requires a minimum notice of three months, would imply a high cost for the companies that hold the derivatives "and could even strain the capacity of the markets for these products," the committee announced.

Many financial institutions have expressed their fear of this potential chaos, and warn that some contracts can not leave the London market because of a licensing problem. The Bank of England uses these fears, with the applause of the City London, to double the pulse to Brussels.


Source link