Britain does not want to take a passive position with the introduction of new rules of the game
Bank of England Mark Karni on Wednesday said that the UK and the EU should reach an agreement on financial regulation after the release of the country from the trade bloc (Brexit) to ensure financial stability.
During his speech before lawmakers Carney noted that the existing principles "equivalence"To allow countries with similar financial regulation to offer their services in the EU, are not satisfied with the UK after Brexit, as the country would lose an understanding of how to create such principles.
"We would not take a passive stance with the introduction of new rules of the game"- he said, speaking before a parliamentary committee, which deals with economic policy.
According to Carney, the main aim of the negotiations should be to establish a formal framework for regulating the UK authorities and the EU, which would help coordinate the new principles of regulation and to maintain the balance of the financial rules. Without such an agreement there is a risk that Britain will face regulations that, according to the Bank of England's leadership, can damage financial stability.
In November, the Bank of England said that the most serious risks to the stability of the UK financial system come from abroad. On Wednesday, Carney reiterated that Brexit, probably is not the biggest threat. Meanwhile, in November, the central bank signaled concerns about the Chinese economy, as well as the overall political uncertainty.
According to Carney, risks to financial stability from Brexit will become more significant for Europe than for the United Kingdom in the event that this factor would complicate access for European countries to the UK equity market. Thus, it is advisable to conclude an interim deal to smooth the transition from the conclusion of negotiations on Brexit the beginning of a new relationship with the EU, he added.
"Short-term risks are more significant for financial stability in Europe than in the UK"- Carney said.
According to him, "in the interests of the UK and the EU-27 to enter the implementation phase and a transitional stage, and to agree on this as soon as possible". The European Union currently comprises 27 countries, with the exception of the UK.
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