Carney and Draghi to hold talks on Brexit risk limitation

BRITAIN and the EU have agreed to hold talks on ways to limit the risk of Brexit to the international finance on which European companies and the UK’S financial services industry rely.

Mark Carney and Mario Draghi will head up a technical working group aimed at making sure vast and vital markets including derivatives trading and insurance contracts are not put at risk by any failure to plan for Britain’s departure from the EU.

EU sources said it would also give the regulators room for contingency planning in case of a “no-deal” Brexit, so they can work out how to minimise the impact on markets.

Last month, UK officials warned that £26 trillion worth of derivatives contracts could go unserviced if European regulators did not allow their companies to access products issued by British institutions.

Tens of billions of pounds of insurance contracts could also be useless if international permissions are not agreed, the Bank of England’s Financial Policy Committee warned.

The Governor of the Bank of England and his counterpart at the European Central Bank were asked to discuss the risks by the Treasury and the European Commission.

No start date has yet been arranged for their talks, but they have 11 months left before Brexit day on March 29 2019.

The agenda has not yet been set, but other likely topics of discussion include the licensing of banks in each jurisdiction and their ability to serve clients across the EU.

Asset managers will also need authorisation to sell funds across the Channel – in both directions – to avoid erecting barriers to that global market. The storage and transfer of personal data is also crucial.

British finance groups welcomed the plan. “This is a pragmatic step so that firms can plan for an orderly withdrawal of the UK from the EU. We remain confident of a pragmatic outcome that protects the interests of UK and EU savers,” said Chris Cummings, chief executive of the Investment Association.

Stephen Jones, head of UK Finance, said the announcement was “a significant and welcome step in ensuring that financial services firms can continue to meet the needs of their customers across the EU as well as the UK. It is positive to see the European Commission and the UK Government taking a pragmatic and prudent approach.”