UK Likely to Lose Role of EU’s Financial ‘Gateway’ After Brexit – Bundesbank

The UK is about to lose its role of the EU financial capital after Brexit, a senior executive of Germany’s central bank warned on Friday.

MOSCOW (Sputnik) — The United Kingdom looks set to lose its role of the EU financial capital after it leaves the bloc, a senior executive of Germany’s central bank warned on Friday.

"The current model of using London as a gateway to Europe is likely to end," Deutsche Bundesbank executive board member Andreas Dombret said in Frankfurt, as quoted by the BBC.

Britain is EU key financial hub, with a third of all wholesale banking operations between governments and large businesses taking place there, according to the broadcaster. It also accounts for almost 80 percent of EU foreign exchange transitions.

That is likely to end once the nation leaves the European Union in two-year time, the German economist warned. He said some banks hoped London and Brussels could agree new regulations to substitute EU passporting, which allows them to operate throughout the bloc’s single market.

"I am very sceptical about whether equivalence decisions offer a sound footing … Equivalence is miles away from single market access," Dombret predicted at a Boston Consulting Group meeting of businesses and bankers.

Last month, British Prime Minister Theresa May signaled her government’s intent to opt for the so-called hard Brexit, which includes exiting the EU single market in order to pursue closer economic ties with nations outside the EU and new deals with EU member states. She said London preferred a free trade agreement with the bloc.