Brexit: Mark Carney urges banks to prepare for all potential outcomes


In his speech, Carney reiterated an earlier claim that "London is Europe's investment banker" and that Britain was relied upon as a "pillar of strength for the global monetary and financial system".

But he also recognised that an agreement on financial services was "one sliver - albeit an important sliver" of the Brexit negotiations.

In the past handful of weeks, Goldman Sachs confirmed its intention to move hundreds of staff from London to Paris as part of their post-Brexit contingency plans, while HSBC's chief executive said in Januarythat the bank could move up to 20% of its banking operation to Paris.

But he also envisaged a scenario where Brexit could be positive for financial globalisation.

Financial services account for 7 percent of British economic output, according to the BoE, although industry lobbyists say this rises to 12 percent if related professional services companies are included.

"The UK Government has made it clear that it is aiming for a comprehensive new trade relationship with the European Union, coupled with an implementation period".

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The speech is Mr Carney's first since Theresa May triggered Article 50 last week, kick-starting the two-year process of Britain leaving the EU.

But major global trade deals to date have largely excluded financial services due to their complexity.

In a speech in London, Mr Carney said the transition poses a risk to financial stability and warned that if it leads to reduced cooperation on regulation and other issues, this will have a negative impact on the economy and jobs.

Trump has said that internationally-inspired banking rules are holding back USA lending, and has ordered a review of regulation, raising concerns that the global approach to financial regulation will splinter.

"Long experience teaches that an open global economy is not predestined", Carney said.

"I'd be very wary of interpreting anything that the U.S. administration does as a rollback of regulation, of a turning inwards, of a fragmentation", Carney said.

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This system could be bolstered by third-party peer reviews and a new independent dispute resolution mechanism, he said - adding that this could be a template for the wider world.

The EU may also be reluctant to forgo the jurisdiction of the bloc's top court in policing rule breaches.

Banks are concerned that Britain and the European Union will not reach a deal in time for Brexit which is due in two years' time, and are preparing to move staff from London, and Germany and France are trying to lure jobs to their financial capitals.

Bank of England (BoE) governor Mark Carney urged banks to get contingency plans in place for all potential Brexit outcomes, as the two-year countdown to the United Kingdom's departure begins.

In his letter to banks, Mr Woods revealed the Bank was concerned about the level of contingency planning should Brexit talks fail to reach a deal.

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