By David Goodman Source: Bloomberg.com The U.K.’s position as a major global financial hub doesn’t depend solely on being part of the European U
By David Goodman
Source: Bloomberg.com
The U.K.’s position as a major global financial hub doesn’t depend solely on being part of the European Union’s single market, said Bank of England Deputy Governor Jon Cunliffe.
In a speech in California on Friday, Cunliffe said that less than 20 percent of assets managed in the U.K. are domiciled in the rest of the EU. Meanwhile, British firms manage around 10 percent of the $12 trillion of assets of funds domiciled in the rest of the EU, less than the proportion managed by firms outside the bloc.
“Despite perceptions in some quarters to the contrary, the U.K.’s role as the leading international financial center does not rest or depend exclusively on the EU single market in financial services,” Cunliffe said. “The U.K. has the largest asset management industry in the EU, but this is not built primarily on the management of the pool of European savings.”
Cunliffe said current EU proposals on portfolio management delegation — a hot Brexit topic — could fragment markets.
To the extent that the proposals “are motivated by Brexit and a desire to pull activity and risk back within jurisdictional boundaries, contrary to current global practice, I do have a concern that they could act as the harbinger of fragmentation to come,” Cunliffe said.
Fragmentation would raise the cost and reduce the efficiency of investing, he said. “It would also slow, and perhaps frustrate, the development of market-based finance globally as a way of diversifying economic risks and benefits across jurisdictions and of dampening economic and financial shocks,” he said.
