2017年-PIIE彼得森国际经济研究所_Making_the_Best_of_Brexit_for_the_EU_8页_235kb

Summary of Policy Brief: Making the Best of Brexit for the EU-27 Financial System

Core Content

This policy brief discusses the potential impacts of Brexit on the EU-27 financial system, focusing on the shift of financial services from London to the EU-27. It outlines both risks and opportunities, emphasizing the need for coherent regulatory and institutional reforms to ensure stability and integration.

Main Points

1. Shift of Financial Activity from the UK to the EU-27

• The UK banking system had total assets of €10.2 trillion at the end of 2014.
• Wholesale banking, which constitutes a significant portion of this, is expected to shift to the EU-27 post-Brexit.
• Estimates suggest that about €1.8 trillion (17% of UK banking assets) could move to the EU-27 due to the loss of the regulatory passport under MiFID.
• The top five US investment banks are estimated to move 35% of their UK revenue (€8 billion) and 10–15% of their UK workforce (around 3,300 employees) to the EU-27.
• Overall, 10,000 banking positions are expected to move from London to the EU-27, with additional 18,000 to 20,000 professional services positions also potentially relocating.

2. Risks of Fragmentation

• A fragmented EU-27 financial system could increase borrowing costs for households and corporations by 5–10 basis points, leading to an estimated annual cost of €6–12 billion.
• Fragmentation may lead to regulatory competition and a "race to the bottom," undermining market integrity and increasing financial instability.
• National variations in rules and enforcement could create inefficiencies and higher compliance costs for banks.

3. Opportunities for Integration

• Brexit could create momentum for the Capital Markets Union (CMU), pushing the EU-27 toward a more market-based financial system.
• Integration would allow for better risk sharing, enhanced market efficiency, and greater attractiveness for global financial business.
• A single rulebook and consistent supervision across the EU-27 are necessary to achieve these benefits.

4. Key Recommendations

a. Reform of ESMA (European Securities and Markets Authority)

• ESMA should be reformed to play a central role in supervising EU capital markets.
• It should be given enhanced powers to enforce regulations and ensure consistent oversight across the EU-27.
• A hub-and-spokes model is proposed, where ESMA works with national authorities.
• ESMA should be funded through a small levy on capital markets activity, rather than relying on the EU budget.

b. Strengthening the Banking Union

• The banking union should be further developed to improve risk sharing and harmonization.
• Key initiatives include:
  • Establishing a European Deposit Insurance Scheme (EDIS).
  • Implementing binding limits on sovereign bond holdings.
  • Enhancing sovereign exposure regulations.
  • Encouraging qualified-majority voting for key banking reforms.
• This would help European banks compete more effectively with US investment banks.

c. Improving Oversight of Financial Infrastructure

• The EU-27 needs to supervise key financial infrastructures such as clearinghouses, even those based outside the EU.
• A US-style extraterritorial supervision framework should be adopted to ensure systemic risks are managed effectively.
• This would prevent reliance on third countries and ensure robust risk exposure alignment.

Key Information

• Wholesale banking is a critical market segment, and its relocation is a major concern.
• The MiFID passport is crucial for UK-based firms to operate in the EU-27.
• Frankfurt is expected to become the dominant financial center in the EU-27, followed by Paris, Dublin, and Amsterdam.
• The EU-27 should avoid a "race to the bottom" in regulation and instead promote consistency and integrity.
• National reforms are not discussed in this brief, as the focus is on EU-level policy.
• The Capital Markets Union (CMU) is a key objective for the EU-27 to become a more integrated and competitive financial system.

Conclusion

Brexit poses significant challenges to the EU-27 financial system, including potential market fragmentation and increased borrowing costs. However, it also presents opportunities for greater integration and a shift toward a more market-based financial system. The EU-27 must implement coherent regulatory reforms, strengthen the banking union, and ensure consistent supervision to mitigate risks and capitalize on opportunities. These reforms should be pursued independently of Brexit negotiations and prioritized to ensure a stable and competitive financial environment.