“Brexit will be a litmus test of the future of international cooperation. The UK and the rest of the EU have exactly the same rules and the most highly developed frameworks of supervisory cooperation. Their capital and banking markets are already highly integrated. They have the potential to create the template for trade in financial services.”
In a keynote address to the IIF Summit in Washington (his previous address at the IIF being in 2011 as governor of the Bank of Canada) he reviewed, broadly favourably, the great progress in regulatory repair on a global basis since the financial crisis, emphasising the reforms that have been brought in, curbing shadow banking, strengthening capital in banks, fostering market-based finance, developing the asset management sector as a more integrated part of capital markets (while monitoring risk factors therein) and, not least, combatting abuse and manipulation of financial markets, notably in the forex market (which he describes as ‘the best of all’).
He described the reforms to financial regulation that have been undertaken, shifting incentives in financial institutions to an ex-ante basis, rather than the ex-post basis that existed before the financial crisis, with its emphaisis on short term remuneration packages within the FS industry.
Now, misconduct by FS practioners can result in claw backs of financial rewards for up to seven years post the event, he pointed out. Developing on this, he called for a shift in regulatory fines from being levied on institutions to target individual decisionmakers responsible for offending actions.
He also describes the work of the FSB he chairs, ‘a non treaty organisation’, with the moral suasion of good example and good practice that can, he evidently believes, serve as an ongoing template for global financial integration, and cross border delivery of international financial services on a global basis, beyond Brexit.
Meanwhile, in Europe, the Taoiseach Enda Kenny met with the prime ministers of Denmark and Netherlands last week to discuss Brexit.
Speaking on the fringes of those meeting, where the Taoiseach delivered a keynote address, Fine Gael MEP Brian Hayes said that, in relation to Brexit “Ireland should take a leading role in rallying against this harmful course of action”.
“We know that there will be Member States who want to punish the UK, especially given that the British Government is taking a hard Brexit line. There needs to be a strong counter balance to this view and Ireland should take a leading role in rallying against this harmful course of action” said MEP Hayes.
Mr Hayes was in The Hague attending the 15th Norbert Schmelzer lecture, organised by the CDA, a Dutch sister party of Fine Gael, at which the Taoiseach, Enda Kenny was keynote speaker.
He welcomed the Taoiseach's meeting with the Dutch and Danish Prime Ministers on Brexit issues and said that forging strong Brexit alliances will be crucial to Ireland's success in the negotiations.
“Ireland is not the only Member State of the EU affected by Brexit. Countries like the Netherlands, Belgium, Denmark and Luxembourg have deep economic ties, as we do, with the UK."
“What will be absolutely crucial is how we engage with small like-minded Member States. Brexit represents a high stakes diplomatic battle and a lot will depend on how strong our alliances are with the likes of the Baltics, the Nordics and the Benelux countries. They have been echoing similar messages in calling for a soft Brexit. That is why today's engagement between the Taoiseach and his Dutch and Danish counterparts is so important - it is an opportunity to align”.
“There's no doubt that those Member States that want to play hardball with the UK will be forming their own alliances. We have to get ahead of the curve,” he said.
Maximising the Opportunities of Brexit will, for policymakers trying to ensure that the softest of soft Brexits possible would be best for Britain, Europe, and its global trading partners US, Canada, Asia and the rest of the world.
These themes will be at the core of the Finance Dublin and FSI Financial Centres Summit, Dublin 2017 to be held in Dublin on October 17th next in Dublin Castle.