The chairman of Barclays bank has said the battle over euro clearing is a political and not economic one, as London and the EU jockey for the position of being the hub for the lucrative business after Brexit.
City heavyweight John McFarlane who also chairs TheCityUK lobby group, has argued that there is no economic argument for moving the settlement of euro denominated financial transactions, echoing comments made by Bank of England governor Mark Carney.
"I think the issue is a conflict between the politics and the economics here," he said in a wide-ranging interview with Bloomberg.
"To my knowledge, nobody has asked for clearing to move, from a business standpoint, because it's actually working efficiently the way it is.
"And so it is true if you say, the transaction costs on an interest rate swap is a quarter of a basis point, simply because the scale is so enormous. And it is true, if you say the euro aspect of that has to move into the EU, you lose the benefit of the multi currency netting effect and therefore [it becomes] less efficient and more costly.
"If you then say, let's open up a multi currency system in the EU, but you keep the multi currency system in the UK which is much bigger, then that would be more efficient, but less efficient than it is today"
He added: "I don't think it will work, aside from anything else. So this is really political more than economic."
He said it was understandable that the European Central Bank (ECB) was nervous of having clearing nearby but without oversight if it remained in the UK, suggesting European authorities should still keep an eye on euro denominated activity.
"If they have oversight of it, than that should be able to accommodate it" he said.
Europe's central bank last month laid out plans for a shake-up of the euro clearing market, raising the prospect that it could be moved away from London. It suggested clearing houses could be "of such systematic importance that the requirements are deemed insufficient to mitigate the potential risks”.