Since financial issues so prevalently dominate the immediate appraisals of whether there is perceived benefit in economic and political decisions, it rather stood out in the wake of Brexit deal definitions and constitutions, that terms had not been established for future financial services interaction between the UK and the EU.
On March 23rd, the UK’s House of commons Treasury Committee published the Bank of England’s ‘written evidence/responses’ to a UK Government enquiry into the post-Brexit future of financial services in the United Kingdom.
Questions discussed related to the future regulatory framework for the UK, its position as a global financial centre, its relationship with other jurisdictions, and how the UK regulatory regime can support innovation, competition and quotas.
Leaving the EU gave the UK an opportunity to steer its approach to financial services’ policies and regulation. They could promote innovations and the ability to seize opportunities from new areas of growth and progressive investment, fortified by possible inclusions of digitization and FinTech.
There are significant gains in having regulatory standards and technical details set out by expert, independent regulators, being transparent and accountable, and the BoE are committed to helping Parliament realise this role.
In that light and confidence, Britain and the EU have begun to take their steps since Brexit, to co-operate on agreeing what they will be establishing in future financial services interactions with the UK and EU, and significantly, mirroring an existing framework between the EU and the US.
There are talks in place to agree new market regulations which will help the City of London to win back some access to the single market lost upon exiting the EU. The two sides have agreed a memorandum of understanding on financial services which the UK Treasury and European Commission recently stated. The content and body of the deal has been finalized and both sides are working towards the formalities of processing and validating.
The technicalities of the text have been concluded with the U.K Treasury stating that “formal steps need to be undertaken on both sides before the MoU (memorandum of understanding) can be signed but it is expected this can be done expeditiously”. *
The MoU will be establishing the joint UK-EU Financial regulatory forum serving as a forum to facilitate discussions on finance issues and will take the form of a non-binding instrument, requiring endorsement by the council.
Since Brexit was implemented, London -based firms have largely been unable to operate in the bloc, which forced some banks to move billions in dollars and assets, and many staff, over to the continent, and for this to be addressed and resolved is welcome news.
Rules and customs reflect business history, economic, cultural, and legal aspects and territory of a country, including the financing function available to companies carried out by financial markets, banks, and Governments. The US has some primary and elevated advantage over the EU, able to offer, across its 50 states, similar property, contract, insolvency and federal tax laws.
It is to be acknowledged that the US is indeed an economic powerhouse with high volume trade already in affirmed and long lasting volume and while there was some reluctance and scepticism regarding the purported benefits of a UK-US Financial Trade Agreement that may have had to necessitate lowering the UK regulatory standards and limits the UK had, with its access to the EU market, it may mean very encouragingly that this new framework will gain us major benefits if indeed the EU agreement mirrors the US deal.