British Chancellor of the Exchequer Alistair Darling warned the EU’s incoming financial services regulator to tread carefully with rules to police markets, saying Europe would suffer if London’s leading position is hurt.
“London, whether others like it or not, is New York’s only rival as a truly global financial center,” Darling said in an article in the Times newspaper published yesterday. “No other center in Europe offers the same range of services. It is in all of Europe’s interests that they prosper alongside their close European partners.”
The remarks are the first reply from a senior British politician to French President Nicolas Sarkozy’s claim that the UK was the “big loser” from last week’s appointment of Michel Barnier as the EU’s next Single Market Commissioner.
Finance ministers met in Brussels yesterday to finalize new measures such as the creation of a single regulator for European financial institutions. Darling wants to prevent centers such as Paris, Frankfurt and “less regulated jurisdictions” from eroding London’s dominant role, while Sarkozy argues he’s trying to tame the market forces that sparked the financial crisis.
The appointment of Barnier, a former French minister, “proves that Europe has taken the consequences of the crisis” into account, Sarkozy said on Tuesday in a speech in La Seyne-sur-Mer, southern France.
“The crisis has come from the drift of an Anglo-Saxon model. For the world, I want the victory of the European model, which has nothing to do with the excess of financial capitalism,” Sarkozy said.
Barnier himself and French Finance Minister Christine Lagarde have struck a more conciliatory tone.
Barnier said on Friday he’s “ready to work with everyone” and doesn’t need to be convinced “of the importance of London as a financial center.”
Lagarde told reporters in Brussels late on Tuesday it’s “clear” that the UK and “others” want to keep the power of a European authority over their banking systems “limited.”
Barnier, as the new commissioner, will be responsible for proposing EU rules covering banks and other financial services firms throughout the EU. He will take up his new duties after European Parliament confirmation, which could come next month.
Darling also urged EU Commission President Jose Manuel Barroso and Barnier to make sure rules to regulate hedge funds, private equity companies and derivatives markets don’t drive business away from London.
“Europe is not competing with itself, but striving for global excellence,” Darling said in the article.
The European Commission in September proposed a system of European regulators, including separate supervisory authorities for the banking, securities and insurance industries as well a European Systemic Risk Board to monitor macroeconomic risks.
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