Crossfire on euro-clearing

Germany has ramped up the battle to wrench euro clearing from London after Brexit, with a top politician dismissing the City’s claim that geographical fragmentation represents a risk to the financial system.

Tarek Al-wazir, economy minister for the German state of Hesse, where the country’s financial centre Frankfurt is situated, said London’s own dominance over the euro clearing industry was in itself a concern for the EU. He said: “If you look at the risks ... everything concentrated in one place is, at the end, the riskiest thing you can have.

“I don’t think that if you have two places, for example, or three places [where euro clearing is based] that it’s more risky. I think the opposite is true.

“If you have the risk offshore - and don’t forget from the perspective of the European Union the UK will be something like ‘offshore’ ... why should the European taxpayer accept that in case something goes wrong that you have to, in the worst case, help someone to survive if you have no possibility to somehow supervise what he’s doing?”

The European Commission put forward proposals last year which would impose stricter supervision of clearing houses by EU central banks and the European Securities and Markets Authority (ESMA), and in some cases force bigger operations to move operations to the single market.