UK government plays down concerns European Central Bank could seize euro clearing from London

 
William Turvill
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Euro clearing has emerged as a major battleground in the Brexit negotiations (Source: Getty)

The government has played down the prospect of euro clearing activity being prised away from London after Brexit.

The European Central Bank (ECB) has previously attempted such a move, but was denied by the EU General Court in 2015.

Several politicians, including French President Francois Hollande, renewed calls for clearing to be moved away from the UK, which dominates the activity, shortly after the EU referendum.

Read more: Moving clearing from London to Europe is no piece of cake

But the UK government does not appear overly concerned.

In response to a House of Lords committee report on Brexit and financial services, the government said: “It is not clear that the rules of the Single Market even after Britain has left would permit the ECB to require euro-denominated instruments to be cleared inside the Eurozone.”

The statement was issued to the EU Financial Affairs Sub-Committee in mid-February and published by the committee earlier this week.

Responding to committee concerns around an attempt to move clearing from London, the government said: “Euro clearing is an important part of the overall financial structure in London that cannot easily be separated from clearing in other currencies.

Read more: German minister confident of winning clearing power from "offshore" London

This is largely due to the economic efficiencies of multicurrency clearing noted in the report. These efficiencies can be very significant and benefit firms in Europe as well as the UK and internationally.

However, when Britain leaves the European Union, there will still be a number of countries who do not use the euro currency who are inside the European Union and thus entitled to the protections afforded by the single market.

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