No side deals from Brexit talks, says Central Bank governor

Philip Lane stresses need to foster collaboration between EU and UK post-Brexit

Central Bank governor Philip Lane:  made the comments during a panel discussion organised by the London Irish Business Society. Photograph: Eric Luke

Central Bank governor Philip Lane: made the comments during a panel discussion organised by the London Irish Business Society. Photograph: Eric Luke

 

Central Bank governor Philip Lane has said no side deals will emerge from the UK’s Brexit talks with the European Union.

Mr Lane, who was taking part in a panel discussion organised by the London Irish Business Society, was reported to have made the remark by Bloomberg.

Mr Lane also dismissed the suggestion that a “new London” would develop as a financial services centre in the EU. Instead, he said, there is likely to be fragmentation across cities.

Furthermore, he said it would be important for the Irish economy that trade post-Brexit is as frictionless as possible.

In his prepared remarks for the discussion, Mr Lane said mechanisms for collaboration would need to be fostered between the EU and the UK.

“The Brexit decision now compels Europe to develop mechanisms to foster collaboration between the EU and the UK that will no longer be bound together by a common multilayered institutional framework,” he said.

“In relation to monetary policy, Brexit does not alter the status quo, with no commitment on either side to stabilise the value of sterling against the euro, and the Bank of England and the ECB each pursuing an independent monetary policy.

Find solutions

“In relation to the clearing of euro-denominated trades in the UK, [ECB]president Draghi has recently pointed out that it will be important to find solutions that at least preserve, or ideally enhance, the current level of supervision and oversight.

“This is important both in relation to the ECB’s role as a supervisor of clearing member banks and as the central bank of issue for the euro.”

More broadly, Mr Lane said, the maintenance of financial stability “necessarily requires considerable bilateral and multilateral collaboration across major central banks”.

“During the global financial crisis, this included a network of currency swap lines to facilitate access to foreign-currency liquidity, while fora such as the Bank for International Settlements and the Financial Stability Board enable the sharing of analysis and information across jurisdictions,” he said.

“Similarly, there is a significant degree of co-ordination in banking regulation through the Basel Committee.

Differences of degree

“Still, there are inevitably differences of degree in terms of the scale of coordination within the EU relative to that achievable through global institutional frameworks.

“Let us see if some intermediate-level arrangements between the UK and the EU will be delivered through the upcoming EU-UK negotiations.”

Separately, Minister of State for Financial Services Eoghan Murphy said the Republic has had more than 100 enquiries in relation to setting up bases post-Brexit, and predicted more decisions would be made by the end of June.

Meanwhile, Fine Gael MEP Brian Hayes said the EU was “a much more significant trading partner” to the Republic than Britain.

“The UK is of course our biggest trading partner and our priority in the Brexit negotiations should be to keep that trading relationship as strong as possible,” he said. “But the truth is that Ireland’s exporting success story is much bigger than Britain alone.”