Europe’s political top dogs have laid out the EU’s regulations regarding cross-border financial services trade. For Britain, this could mean stricter rules when the country leaves the EU.
The European Commission has announced it is taking stock to its rules regarding equivalence in the area of financial services. In short, equivalence means ensuring that the rules regarding financial services in non-EU countries are in line with those of the trading block. Essentially, under the equivalence system countries are allowed to trade with the EU if their financial rules are deemed to be tough enough.
The European Commission has now stated that it will put greater emphasis on supervising and monitoring non-EU countries to ensure their rules are up to snuff. While not mentioning the UK by name, this would also apply to Britain after Brexit. The EU has made it clear the equivalence system would be the only one available to the UK after the country leaves the trading block.
If nations fail to meet the EU’s rules then they could see their status removed. The European Commission also announced that this has recently happened to Argentina, Australia, Brazil, Canada and Singapore. Those countries were deemed to no longer meet the standards set by the EU Credit Rating Agencies after its amendment in 2013.
Valdis Dombrovskis, Vice-President for Euro and Social Dialogue, also in charge of Financial Stability, Financial Services, and Capital Markets Union said, “Equivalence is one of our main tools to engage with third countries in financial services. It’s mutually beneficial because it enables us to have a robust cooperation with our partners and to open up our markets to non-EU market players and vice-versa. Our equivalence policy has proven effective so far, and we now have even better rules in place to meet our objectives of preserving financial stability while promoting international integration of EU financial markets.”
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