Reflections on EU Financial Regulation After Brexit

José Manuel CAMPA * Chairperson, European Banking Authority. Contact: JoseManuel.Campa@eba.europa.eu.

This article provides a brief overview of the efforts taken in the regulatory and supervisory sphere in the first post-Brexit phase and highlights the challenges ahead. Brexit has created a new landscape for financial institutions in Europe. Banks, regulatory authorities and supervisors worked intensely to ensure a transition without any significant distortions. Brexit has caused structural changes for credit institutions as they adjusted their operations to serve the EU market. Brexit has also brought to surface the EU dependencies on the UK financial sector, especially in the area of derivatives clearing, that will need to be addressed in the near future. Going forward, the EU and the UK should continue to show their strong commitments to preserving open financial markets and global regulatory standards in the financial sector. Those principles should help build a collaboration framework to avoid weakening financial standards, risk fragmentation or financial disruption.

Brexit represented and still represents a pivotal moment for the European Union (EU). For the first time, since the beginning of the process of post-war European integration, a member state decided to leave the Union. As a result, the EU27 and the United Kingdom (UK) are not as integrated as before, and this affects many areas of activity much beyond economic and financial issues. Brexit also represents a watershed moment for the EU financial sector. London was the largest financial centre of the EU and the UK financial sector played a much larger role in the overall EU financial landscape than the relative weight of the UK population or GDP in the Union.Brexit creates a new landscape under which banks, EU regulators and EU supervisors must operate. Several elements of this new landscape have been developing as part of the preparations…