ECB welcomed ratification of the agreement on an orderly withdrawal of UK from EU. In recent months and years, ECB has taken steps to prepare for all contingencies and it will continue to closely monitor developments in financial markets to preserve stability. ECB stresses that banks now need to press ahead with the implementation of their Brexit plans in accordance with agreed timelines.
The ECB President, Christine Lagarde, said: “It is with great regret that we see our British friends leave the European Union. This agreement, however, will pave the way for an orderly and less disruptive departure. We will work hard to ensure Brexit causes as little disruption as possible for the citizens, employers, and financial markets in the euro area and the rest of the EU.” Specifically, ECB has made the following preparations:
- In banking supervision, ECB processed nearly 25 licensing procedures for banks relocating to the euro area and assessed the Brexit plans of 42 euro area banks that will maintain their UK branches after UK leaves EU. ECB now expects banks to implement their plans in line with the commitments they made in the past, including the implementation timelines they agreed with their supervisors.
- ECB and its UK counterparts have taken steps to ensure continued good cooperation in the area of banking supervision, even after the transition period ends. For this, a memorandum of understanding was agreed to allow supervisors to continue exchanging information and to coordinate the supervision of cross-border banking groups.
- ECB and BoE activated a currency swap arrangement in March 2019, through which BoE offers to lend euros to UK banks on a weekly basis. As part of this agreement, the Eurosystem would stand ready to lend pounds sterling to euro area banks if the need arises. This will reduce possible sources of stress in the financial system.
- BoE will leave the European System of Central Banks and its current share in the ECB’s subscribed capital, which stands at 14.3%, will be reallocated among both the euro area national central banks and the remaining non-euro area national central banks on the basis of an updated key for subscription to the ECB’s capital.
Keywords: Europe, EU, Banking, Brexit, Withdrawal Agreement, MoU, Banking Supervision, Cross-Border Cooperation, ESCB, ECB
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