It is not usual for the Governor of the Bank of England to ask permission to make a statement about a completely unrelated issue when giving evidence on inflation to the Treasury Select Committee. So we knew it was serious when Andrew Bailey yesterday told us his concerns about Brussels trying to force banks to relocate their euro clearing from London to the EU.
It is not a surprise that the EU wants to do this – France has been pushing for this for years before Brexit, leading to it losing a case to the UK at the European Court of Justice – but what is concerning is the desperate extremes the EU seems prepared to go. It was, Mr Bailey said, bordering on the illegal.
According to reports of its discussions with the industry, the EU is thinking either of extraterritorial legislation or using other powers granted for different reasons to force banks to clear their euro denominated derivatives within the geographic boundaries of the EU. This
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