After Britain warned of the risks for Brexit without an agreement with Brussels, the EU’s financial regulators decided to intervene in an attempt to avoid market turbulence.
The Chairman of the Single Supervisory Mechanism of the European Central Bank (ECB), Daniele Nouy, assured that the financial institution is ready to “help ensure a smooth Brexit despite the outcome of the political talks”.
But it is not alone. The chairman of the European Securities and Markets Authority, Steven Maijoor, called on Brussels to ensure that banks in the financial bloc would not lose vital access to London’s clearing houses in a chaotic divorce.
This represents a significant change, as the EU has so far claimed that Brexit’s preparations for a transitional period are the responsibility of the industry. Now, however, Daniele Nouy and Steven Maijoor have signaled that the European institutions are ready to take action if necessary.
The talks on Brexit entered into a key phase, with two weeks of intensive debates in an attempt to reach a deal before the October 17 summit.
In the words of ECB Governing Board member Ewald Novotny, possible threats are still underestimated. “There are many signs that the risk of Hard Brexit will become applicable”, added he.
According to the Central Bank of England (BoE), a chaotic Brexit may put at risk derivatives contracts worth up to 96 trillion GBP (126 trillion USD), and unsecured billions of pounds.
So far, the European Commission has underestimated the warnings of the ECB, insisting that companies have a responsibility to secure their existing contracts. The EC earlier said they were ready to keep pace with the progress of the negotiations and would re-evaluate the situation after the October summit.