FRANKFURT (Reuters) - Britain’s ‘special status’ deal with the European Union, aimed in part at securing London’s future as a financial centre, could ultimately bolster the power of the European Central Bank, the chairman of Royal Bank of Scotland said on Monday.
Britain is preparing to vote in June on a deal struck by Prime Minister David Cameron to keep the island nation in the 28-member European Union (EU).
The arrangement allows Britain to tweak EU rules, eroding the power of the European Banking Authority (EBA), a London-based agency now charged with writing and policing common EU rules for banks.
But it also allows for deeper integration of the 19-country euro zone, giving the ECB more leeway to adapt EU rules without British interference, effectively granting the Frankfurt-based central bank more clout.
“At the moment it (the EBA) is in London to ensure that London and the euro zone have similar rules,” Howard Davies told a conference in Frankfurt.
“If this is now formalised differently by a settlement, I wonder where the EBA goes. And therefore its adds further force (to the arguments) for consolidating regulatory power within the ECB.”
Davies also played down oft-cited complaints that Brussels generates onerous regulation for banks.
“If you ask me which (regulations) constrain us the most, it would be partly Basel (banking regulations), partly the UK, and the EU would be way down the track,” he said.
Davies’ remarks echoed the view of some regulators, who have said the Britain-EU settlement may gradually shift the centre of gravity for financial services to the euro zone, sidelining Britain.
Reporting By Francesco Canepa; Editing by Kevin Liffey