On April 25, the European Commission (EC) published a speech given by Vice President Valdis Dombrovskis, European Commissioner for Financial Stability, Financial Services and Capital Markets Union (CMU), on the challenges facing EU financial services policy. In the speech, among other things, Mr. Dombrovskis considered the implications for financial services of the UK’s departure from the European Union, focusing on the following issues:
- CMU. Mr. Dombrovskis provided an update on the state of the CMU Action Plan devised by the EC, stating that 19 of the 33 measures announced in the CMU Action Plan have been delivered. Mr. Dombrovskis went on to state that the departure of the United Kingdom from the European Union will make achieving CMU more difficult, but also more important and urgent; and, in his view, it is only together as a CMU will the remaining Member States have the depth and liquidity for markets to function efficiently after the departure of the EU’s largest financial center.
- Equivalence. Mr. Dombrovskis stated that while the European Union intends to continue to make active use of equivalence, it is not a right for all third countries, nor is it a blank check whereby the EU will give up control over key systemic risks to its financial stability. Instead, the EU must consider every case on its own merits, based on the principle of proportionality, and decide if and under which conditions equivalence can be granted, including ongoing monitoring of any change in circumstances.
- Supervisory convergence. Mr. Dombrovskis warned of the risks of a race to the bottom among national financial supervisors to win over business in the aftermath of the UK’s departure from the European Union, at the expense of financial stability. He stated that firms must be subject to consistent supervision and enforcement of common rules in all Member States.
A copy of the speech is available here.