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ECB couldn't "tolerate" London grip on euro trading post-Brexit: France's Noyer
[LONDON] European authorities could not allow London to remain the trading centre for the euro if Britain left the European Union, former Bank of France Governor Christian Noyer said on Thursday.
In an article for economic think tank OMFIF, Noyer, who was one of the European Central Bank's most senior figures until late last year, sent the latest warning that the eurozone would try to wrestle more control of trading back from London.
The volume of euro-dollar trading alone was some US$640 billion a day in London last year and traders in the City financial district now buy and sell more than twice as many euros as the whole 19-member eurozone.
"If Britain left the EU, the euro area authorities could no longer tolerate such a high proportion of financial activities involving their currency taking place abroad," Noyer wrote. "It is already very difficult for euro members to accept that our currency is largely traded outside the currency area, beyond the control of the ECB and of euro area institutions such as market regulators."
The head of London-based HSBC, the world's fifth-largest currency trader and Europe's biggest bank by assets, has already said it could move around 1,000 employees from London to Paris should Britain vote to leave the EU in a June referendum.
The currency market's second biggest player, Deutsche Bank , has also said it may cut its British operations while industry lobbyists say several other banks are mothballing investments until the outcome of the referendum is known.
More than 40 per cent of the roughly US$5 trillion per day of foreign exchange traded globally by banks, companies and investment houses passes through London.
The ECB has already attempted to require clearing houses that deal with large amounts of euro denominated securities, such as LCH.Clearnet in London, to shift to the eurozone, but this was rebuffed by the EU's top court in Luxembourg.
"When tensions occur and risks materialise, the interests of a foreign financial centre might take priority over those of the currency area itself," Noyer said in the article. "That can be acceptable only if, and as long as, the UK is a member of the EU, and accepts the involvement of, and co-operation with, the European regulatory agencies."