As Tensions With Russia Mount, Is Europe Entering a Bank War With Washington?

European officials are labeling Russian media a weapon in an ongoing “hybrid war” against the West, while the European Commission will announce new financial regulations that will require major US banks doing business in the EU to park billions of dollars on European soil.

The European Commission is set to announce a proposal that will require US banks to relocate their EU headquarters, from London to one of the bloc's member states, and park a considerable amount of capital on European soil, according to Agence France-Presse.

This measure is said to mirror a 2014 decision in the US requiring European banks doing business on American soil to park capital in the country.

"We are actually mirroring what the US has already done," a European source said, in advance of the announcement of the new capital requirements.

If the proposal is passed into law, major US financial institutions that do business in the EU will be required to set aside an estimated billions of euros, according to the Financial Times. If the proposal, whose final text remains secret, is finalized in its most stringent form, US banks would be required to establish holding companies in more than one EU country, and keep funds for each of those entities separately.

"The European Commission took some time to respond to the US authorities," said Nicolas Veron, an economist with the Peterson Institute for International Economics in Washington and the Brussels-based think tank Bruegel.

Some experts say this measure is just one example of a broader trend of EU national governments fighting financial globalization.

"The national jurisdictions are pushing back against much of the international process right now," said one unnamed source familiar with US financial interests. "Definitely the national governments are heavily involved in protecting their institutions."

"This could be the first of many similar [issues]," the source said.

The proposal also would require banks that base their European operations in London to move their headquarters to the continent, which would severely damage London's status as the finance capital of Europe.

According to Veron, "The British will say this is a stab in the back even before the start of Brexit negotiations."

During the Brexit referendum, London almost unanimously voted against separating from the EU, sparking talk about the City of London, an area within greater London itself that is notorious as a global financial center, becoming an independent city-state, in order to remain an EU member.

The EC proposal comes amid ongoing US-European economic tensions exacerbated by Brexit and the wildcard of the incoming Trump US Presidency.