Event Report on “Brexit and Financial Services” 12 April 2018
By Sose Mayilyan and Annelieke Mooij, PhD Students, Dublin City University
On 12 April 2018 the DCU Brexit Institute organized an event on Brexit and Financial Services, that featured an opening keynote address by Joaquin Almunia, former European Commissioner, an expert panel discussion, and a closing keynote address by Ed Sibley, Deputy Governor, Prudential Regulation, Central Bank of Ireland.
Opening Keynote Address: Joaquín Almunia
The conference held by DCU Brexit Institute on “Brexit and Financial Services” was opened with a keynote speech by Joaquín Almunia, former European Commissioner for Economic and Financial Affairs. He began by pointing out that he does not see any real possibility of going backwards and reversing Brexit before March 2019. Mr. Almunia noted that since the UK decided not to remain a part of the Single Market after the end of the transition period, the providers of financial services who are established in the UK will not be eligible to benefit from the “passport” which allows them to operate in the territories of EU Member States.
Mr. Almunia insisted that this is an opinion held unanimously among the EU-27. What will be applied instead is an equivalence system, based on decisions which are revocable at any time. The question of how this equivalence regime will impact financial entities and different market players, according to the former Commissioner, will depend on their attributes, such as their organizational structure and their regulation in the EU and the UK. Almunia concluded that Brexit will result in damages both for the EU and the UK, but the Union, he believes, has more possibilities of minimising those damages.
After the opening speech the panel discussion was launched by Niamh Moloney of the London School of Economics. She presented the British perspective, or that of “over the Irish sea”, speaking about the future of EU-UK relationships. The two main themes in her remarks were that of the withdrawal agreement and the future of the trade agreement. In her speech she emphasized the importance placed upon the mantra of “nothing is agreed until everything is agreed’. Additionally she expressed the view that the transition period is just a way of moving the cliff and emphasized the difficulty of these negotiations without a template.
Her speech was followed by the second panellist: Robert Cain, a solicitor at Arthur Cox. He spoke about the relocation that financial firms are busy with and Ireland’s place in the top two of possible options. Though Ireland is in the top two he emphasized that most of the firms looking to move to Ireland have history or connection to the country. Furthermore he explained the difficulty that firms face when relocating and the possible death over time for the City.
His speech was followed by that of Valerio Scollo of GSK Luxembourg who spoke about the three main models upon which future EU-UK relations could be based. These three models are the Norwegian, Canadian and Swiss. Additionally he showed the amount of jobs at risk in the U.K. financial sector and other issues such as governing law and place of jurisdiction. He said, Brexit brings disruption which is equal to loss. Opportunities, however, will come and we will have to develop the EU together.
Last was Mark Cummins from Dublin City University who emphasized in his speech about the future of financial services and ‘FinTech’ (financial technology). He considered that the way we think about money is changing, giving the examples of crypto currencies, peer-to-peer-lending and artificial intelligence. He expressed the contrast that the UK is leaving whilst the rest of the EU seems to be harmonizing. Furthermore businesses have two major challenges, the first being EU-passporting and the second increased competition as a result of is that integration increases competition. This increased competition requires a change in the long term business model. Though Dublin is good for passporting, Mr. Cummins emphasized that in many ways Dublin is not as advanced as London. In short the panel showed there are many challenges to be faced however there are also further opportunities. The panel was followed with a Q&A session after which the closing address was given by Ed Sibley.
Concluding Keynote Address: Ed Sibley
The event was concluded with a keynote speech by Ed Sibley, the Deputy Governor of The Central Bank of Ireland, who noted that Brexit will have fundamental effects on the British, Irish and European financial systems, although not all financial sectors would be affected in the same way. He pointed out that Brexit will influence the regulation of financial services in Europe significantly, in terms of how the policy of this area is developed and also on how the sector is overseen in the new reality of UK being outside of the European system.
Touching upon the impact of Brexit on the Irish economy, Sibley noted that there is still much uncertainty around it and that impact depends highly on how the future relationship between the EU and the UK will be regulated. He also noted that Brexit will have a significant impact on how financial institutions will interact with each other and added that the alterations in the European regulatory landscape are the key risk in the broader process of Brexit. Sibley also stressed that even in the best case scenario, major disruptions are still likely to happen.