Bailey: Brexit has created ‘opportunities’ – but policymakers must tread carefully
Andrew Bailey, governor of the Bank of England, warned that policymakers should take no chances with financial stability despite the “opportunities” that Brexit has created for the UK.
In an interview with Prospect Magazine, Bailey said “we have to be clear-sighted and careful about where we go in terms of where regulation and where the structure goes” stressing that the UK’s financial markets are a “global public good”.
The government has tried to capitalise on the UK’s departure from the EU, in particular by enabling wide-ranging reform of financial services rules. At the end of last year, it announced the Edinburgh Reforms, which seek to reintroduce a greater degree of risk into the financial system.
As part of the reforms, the government passed the Financial Services and Markets Act, which empowered UK regulators to onshore and amend many of the regulations that were previously determined at a bloc-wide level.
Policymakers hope this will help deliver a more nimble regulatory framework and boost the City’s performance against global rivals.
Bailey was relatively optimistic about the effect of Brexit on the City, suggesting that the impact of Brexit had been smaller than the “dire predictions” that were made before the referendum.
In fact, he argued that Brexit had “created opportunities” for the UK, particularly in financial services. “I’ve always said, not everything about EU regulation was best suited to any national circumstances”.
“We do have opportunities and I support what the government is doing to think through how to make best use of those opportunities,” he continued.
But Bailey reiterated the importance of maintaining financial stability. “We have a big responsibility on that front,” he said.