LONDON: Britain will adopt tough but less bureaucratic financial rules after Brexit, starting with simpler regulation of small banks, Bank of England Deputy Governor Sam Woods said on Tuesday.
Britain will soon unveil new legislation for regulating the City of London, which for decades has complied with rules written in Brussels that end in December, when Brexit transition arrangements expire.
Leaving the European Union has raised hopes of a regulatory “Brexit dividend” that will help banks and insurers in Europe’s biggest financial centre maintain global competitiveness.
“We should approach that in the spirit of, let’s have high standards here in London and here in the UK, but let’s get back to a more British way of doing that regulation — things that can be tough but less bureaucratic,” Woods told a City Week online event.
When Britain comes to applying remaining global bank capital rules known as Basel III, it will be “exactly in that format”, he said, adding that the BoE would propose simpler rules for smaller lenders in a month or so.
“It would have been impossible to agree in the European context as one person’s big bank is another person’s small bank,” Woods said.
Katharine Braddick, director general, financial services at Britain’s finance ministry, said much thought had been given to what makes the City competitive.
“Openness is at the core of our competitive offering,” Braddick said, adding this does not mean a “free for all”: “It means we have a set of access regimes that are becoming more comprehensive and over which we have more control.”
The financial sector in Britain faces losing much of its access to the 27-nation EU, its biggest single customer, while also fighting the pandemic.
“In terms of the financial sector through the crisis so far, so far so good is my feeling about it,” Woods said.
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