LONDON Following are highlights from Bank of England Governor Mark Carney's speech on international banking at Thomson Reuters' headquarters in London on Friday.
To watch the event live, please click on: reut.rs/2nWLFGo
ON BREXIT FINANCIAL SERVICES DEAL
Asked if he was calling for a specific financial services deal with the EU after Brexit, Carney replied:
"No, short answer no. The government has been clear about this and we fully support it. I'll use the prime minister's words: a comprehensive, bold, ambitious new free trade arrangement and that encompasses everything."
"We fully recognize that the negotiations around financial services are one sliver, albeit an important sliver, but a sliver of a much wider set of discussions that the UK and the EU have just embarked upon."
SHOULD BANKS MOVE NOW?
"No, that's not the most prudent. It's prudent to be in a position to continue operating after the UK leaves."
EURO CLEARING IN LONDON
"There are tremendous economies of scale and scope in clearing multiple currencies in one location."
"We will work hard with European authorities to ensure that the appropriate amount of euro business continues to be cleared in London."
BANKS SHOULD PLAN FOR ALL EVENTUALITIES
"What you would do is, you would follow the spirit of the letter you are receiving today which is to plan for all eventualities. Now I will say that for the vast, vast majority of firms located in the City of London and across the UK, that's exactly what they have been doing..."
"Prudent planning means that you have to also plan for a shorter time horizon and a more extreme outcome. That in no way shape or form is saying that that's what our expectation is, and certainly we'll be absolutely clear that is not in the best interest of the EU 27 or the United Kingdom or the global system as a whole."
BENEFITS OF LONDON AS FINANCIAL CENTER
"There are tremendous, tremendous advantages of being part of the world's leading financial system, unfortunately there will be some costs in terms of contingency planning for the full range of activities but in my view would be extreme to take precipitate action given the two jurisdictions."
"We fully recognize that having the most sophisticated but also the most complex and therefore potentially the most risky financial system on our shores brings special responsibilities."
"We've responded in terms of the standards we have here but also in terms of investment and supervisory capacity, market infrastructure, the expertise that is resident here. "
"That's very difficult to replicate and it does bring prosperity but it also brings risk."
HARD TO REPLICATE LONDON'S ADVANTAGES
"We fully recognize that having the most sophisticated but also the most complex and therefore potentially the most risky financial system on our shores brings special responsibilities. We've responded in terms of the standards we have here but also in terms of investment and supervisory capacity, market infrastructure, the expertise that is resident here first in Canary Wharf, then London, then across the UK. That's very difficult to replicate."
BUILDING BLOCKS FOR BREXIT TRANSITION PERIOD
"All the building blocks are there for a system of enhanced access... for a wide range of financial services. Now, that will be determined by the negotiations and the timeframe in which that is put in place. It will also be determined by those negotiations, which as, both the Prime Minister and President Tusk have acknowledged, may include a implementation period, which is the Prime Minister's language, I think the president uses transition period."
ON HOW U.S. REGULATION MIGHT CHANGE
"I think we should recognize a couple of things. One is that, the U.S. authorities have, over the last several years, done several things that are unique to the United States..."
"They may adjust some of those elements, just like we could always adjust certain things that are bespoke to the United Kingdom and go above and beyond international standards. That wouldn't necessarily have any implication for the ability to build this system, to take full advantage of the system of mutual recognition, and we should recognize that."
"I'd be very wary of interpreting anything that the U.S. administration does as a rollback of regulation, of a turning inwards, of a fragmentation. And I think that we have the mechanisms at the FSB, at the G20, to work together to avoid misinterpretation."
MONETARY POLICY OUTLOOK
"Our central forecast has some modest withdrawal of monetary stimulus over the course of the next few years. There is risk to both sides of that."
"(There) are some signs of (strong consumer demand) coming off slowly. That's what we expect but we'll monitor it and ensure that we chart the right path."
(Reporting by UK bureau)