Cameron's EU deal could bol­ster ECB's pow­ers: RBS

The Pak Banker - - COMPANIES/BOSS -

Bri­tain's ' spe­cial sta­tus' deal with the Euro­pean Union, aimed in part at se­cur­ing Lon­don's fu­ture as a fi­nan­cial cen­tre, could ul­ti­mately bol­ster the power of the Euro­pean Cen­tral Bank, the chair­man of Royal Bank of Scot­land said to­day.

Bri­tain is pre­par­ing to vote in June on a deal struck by Prime Min­is­ter David Cameron to keep the is­land na­tion in the 28-mem­ber Euro­pean Union (EU). The ar­range­ment al­lows Bri­tain to tweak EU rules, erod­ing the power of the Euro­pean Bank­ing Au­thor­ity (EBA), a Lon­don-based agency now charged with writ­ing and polic­ing com­mon EU rules for banks.

But it also al­lows for deeper in­te­gra­tion of the 19-coun­try euro zone, giv­ing the ECB more lee­way to adapt EU rules with­out Bri­tish in­ter­fer­ence, ef­fec­tively grant­ing the Frank­furt-based cen­tral bank more clout.

"At the mo­ment it (the EBA) is in Lon­don to en­sure that Lon­don and the euro zone have sim­i­lar rules," Howard Davies told a con­fer­ence in Frank­furt.

"If this is now for­malised dif­fer­ently by a set­tle­ment, I won­der where the EBA goes. And there­fore its adds fur­ther force (to the ar­gu­ments) for con­sol­i­dat­ing reg­u­la­tory power within the ECB."

Davies also played down oft-cited com­plaints that Brus­sels gen­er­ates oner­ous regulation for banks.

"If you ask me which (reg­u­la­tions) con­strain us the most, it would be partly Basel (bank­ing reg­u­la­tions), partly the UK, and the EU would be way down the track," he said.

Davies' re­marks echoed the view of some reg­u­la­tors, who have said the Bri­tain-EU set­tle­ment may grad­u­ally shift the cen­tre of grav­ity for fi­nan­cial ser­vices to the euro zone, sidelin­ing Bri­tain.

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