IT SEEMED apt that, almost immediately after Lady Thatcher’s funeral last week, I was jumping onto a flight to Washington for one of my regular round of meetings with regulators, officials and industry representatives.
During her time in office, Lady Thatcher did a huge amount to cement the Special Relationship with the US, and that enduring legacy continues to this day.
The UK and the US are home to the world’s leading global financial centres and have long maintained a good working relationship amid friendly competition for business. In general that remains the case, despite some tensions caused by regulatory action on both sides of the Atlantic.
Importantly, the response to the financial crisis has included proposals with significant extraterritorial reach, from both the US and Europe. The global crisis has, in some respects, led to regulatory fragmentation. Regulatory fragmentation and arbitrage are a threat to the business confidence needed to drive job creation and stimulate the economy. It is crucial, therefore, that policymakers work together to coordinate on key reforms.
Some of the big issues on the agenda for leading institutions on both sides of the Atlantic include capital requirements, resolution and recovery, the cross-border swaps market, and the proposed European financial transaction tax.
It is important that we avoid a situation where conflicting rules in the US and EU increase the cost of doing business in both jurisdictions to our mutual loss. The only winners in such a situation would be other centres in Asia and elsewhere.
Getting the detail right in order to ensure a level playing field needs to be a major priority for regulators. That principle should also be at the heart of discussions on the proposed EU-US free trade agreement.
Lowering tariffs and removing other trade barriers could provide a significant economic stimulus if protectionist sentiment centring on some sectors, notably agriculture, can be overcome.
Policymakers in Europe are gradually recognising the need to focus on growth and job creation. I hope Lithuania – where I will be visiting tomorrow with the lord mayor – will place this agenda at the heart of its Presidency of the Council of the European Union.
The City’s success in recent decades has been underpinned by access to the Single Market and the opportunities for financing trade that access has delivered. A more level playing field between Europe and the US – including a more joined up approach on regulation – has the potential to deliver similar economic benefits. It is now time for those on both sides of the Atlantic to deliver on that vision.
Mark Boleat is policy chairman at the City of London Corporation.