eu financial markets competition: uk treasury takes on ecb September 15, 2011Posted by Bradley in : markets , trackback
Newspapers are reporting the UK’s Treasury plans to fight a European Central Bank plan to require clearing of some financial products in the eurozone, threatening UK based clearers. Here’s some relevant language from the ECB’s document:
Given its mandate to promote the “smooth operation of payment systems”, the Eurosystem has major concerns with regard to the development of major euro financial market infrastructures that are located outside of the euro area, since this could potentially place in question the Eurosystem’s control over the euro.
As a matter of principle, infrastructures that settle euro-denominated payment transactions should settle these transactions in central bank money and be legally incorporated in the euro area with full managerial and operational control and responsibility over all core functions for processing euro denominated transactions, exercised from within the euro area. This is reflected in the policy fundamentals issued by the Eurosystem on the location and operation of infrastructures that settle euro-denominated payment transactions.