Bank of England Criticizes Brussels on Brexit plans
The Bank of England on Wednesday criticized the European Union for not revealing financial sector contingency plans in the event of Britain leaving the bloc without a deal.
The BoE's Financial Policy Committee, tasked with safeguarding the financial system, meanwhile praised the UK government's "progress" on handling risks arising from Britain's EU withdrawal, due on March 29 next year.
The regulator added in its biannual stability report that Britain's EU (Withdrawal) Bill alongside plans for a temporary permissions regime allowing post-Brexit cross-border financial trade had dimmed those risks.
The BoE hit out also at the EU's banking regulator, which had on Monday criticized UK-based financial firms' Brexit contingency preparations.
Providing an overall assessment, BoE governor Mark Carney said Wednesday: "The biggest remaining risks of disruption are areas where action is needed by both UK and EU authorities, such as ensuring the continuity of the £96 trillion ($127 trillion, 109 trillion euros) of existing derivative contracts."
He added: "Based on our experience and knowledge of these markets, it will not be possible, ahead of March 29, for private financial institutions on their own to mitigate fully the risks of disruption to financial services."
Carney said that "the EU has not yet indicated their solution to these fundamental issues which would be expected to have more material impacts on the costs and availability of finance on the continent in the unlikely event of a disorderly Brexit".
On Brexit disruption preparations, the bank added: "Progress has been made, but material risks remain."
The BoE remains anxious that firms may be unable to service trillions of pounds worth of cross-border financial services contracts -- including for individuals' pension and insurance products -- following Brexit.
"As yet the EU has not indicated a solution analogous to a temporary permissions regime," the BoE report added Wednesday.
"EEA (European Economic Area) customers remain reliant on UK-based financial companies being able to overcome any future barriers to cross-border service provision."
The report was meanwhile published two days after the EU's European Banking Authority (EBA) watchdog warned that financial firms "must speed up" contingency plans in case of a hard Brexit.
Carney, questioned about the matter by reporters, called the EBA's stance "incomplete."
"With respect... I think that the EBA's comments earlier this week were incomplete, and they were incomplete in the extent to which it did not acknowledge the temporary permission regime which has been very clearly signaled by the government," he said.
Carney added: "I think it's a question for the EBA, why that aspect is incomplete."
The BoE also on Wednesday unveiled plans for a new cyber attack test next year for the financial services sector.
Source: Agence France Presse
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