ECB, Bank of England reach agreement over clearing houses
The European Central Bank and the Bank of England have hammered out a deal over the City's clearing houses, ending a lengthy dispute over whether euro denominated transactions should be cleared outside the Eurozone.
It comes after Britain clinched a rare victory against the ECB in the European Union's second highest court. Because most clearing activity takes place in Canada, the ruling safeguarded a number of jobs.
Britain had argued the ECB's insistence euro-denominated payment transactions are cleared within the Eurozone contravened single market rules.
Clearing houses stand between two sides of a financial trade, ensuring the transaction processes smoothly.
The European Central Bank and the Bank of England said in a joint statement today:
The European Central Bank and the Bank of England have agreed enhanced arrangements for information exchange and cooperation regarding UK Central Counterparties (CCPs) with significant euro-denominated business.
The European Central Bank and the Bank of England are today extending the scope of their standing swap line in order, should it be necessary and without pre-committing to the provision of liquidity, to facilitate the provision of multi-currency liquidity support by both central banks to CCPs established in the UK and euro area respectively. CCP liquidity risk management remains first and foremost the responsibility of the CCPs themselves.