The City’s fightback against the EU’s Brexit warnings stepped up a gear today as Bank of England governor Mark Carney took to the field, warning that EU officials are not putting in sufficient effort to preserve financial stability post-Brexit.
The EU has not matched commitments by the UK government to allow European firms to continue to operate in Britain, Carney said.
The most urgent need is an agreement to secure a legal basis for contracts to continue to function once the UK leaves the EU. Derivative contracts with a notional total value of £96 trillion – which firms across the economy use to manage risks such as changing interest or exchange rates – are in danger, the Bank said.
The hazards around derivative contracts are “the biggest remaining risks of disruption” as the UK leaves the EU in March 2019 and could cause credit costs to surge, Carney said, speaking at the Bank’s biannual report on financial stability.