BRUSSELS (BLOOMBERG) Faced with political chaos in London, the European Union (EU) is stepping up its efforts to avoid a rupture in financial markets if the United Kingdom (UK) leaves without an agreement in little more than two months.
The European Commission reminded EU finance ministers on Monday that preparing for a messy divorce is a shared responsibility. The bloc's executive arm has already announced a plan under which banks on the continent will be able to use some financial infrastructure in London even after a no-deal Brexit.
"Our financial system is integrated so we all need to be sure that risks are being addressed without creating supervisory loopholes," Valdis Dombrovskis, the EU's commissioner in charge of financial-services policy, told Bloomberg after the meeting in Brussels. "The private sector needs to step up its preparations, but member states also need to be ready."
Derivative contracts handled via clearinghouses in London were identified by the commission as one of the biggest risks to financial markets arising from a no-deal Brexit. When it adopted its decision to allow 12 months of access to London Stock Exchange plc's LCH Ltd and other clearinghouses last month, it also called on member states "to accelerate their work to prepare for all scenarios" for the UK's departure.
Germany and France are among countries that have taken national steps to make sure that financial contracts concluded with firms in the UK can be serviced even if the UK leaves without a deal on March 29. London's financial industry is meanwhile shifting operations to the rest of the EU to make sure it can continue to do business with clients there.
Dombrovskis said the EU is now planning to work closer together on initiatives that can't be taken by officials in Brussels alone. "We are setting up a common platform with member states to coordinate and exchange information about national measures," he said.