The City of London Corporation has promised to do its utmost to ensure the successful launch of a capital markets union across the European bloc — despite the UK leaving the trading group.
Catherine McGuinness, chair of the corporation’s influential policy committee, told guests at a dinner in London tonight that the corporation — and the overwhelming majority of City firms — were “firmly in favour” of the European Union’s CMU initiative.
“We will do our best to make sure that the project remains on track,” she said, at the event hosted by the lobby group Association of Financial Markets in Europe.
Launched two years ago, and planned for completion by 2019, the CMU is aimed at boosting financial markets by easing the flow of money from savers and investors through fund managers to companies.
“The CMU is a vital initiative for improving the efficient allocation of capital within Europe towards long-term finance, while increasing the overall amount of capital in the system,” McGuinness said. “Even outside the EU, London’s deep capital markets mean it will continue to be a key component of this evolution.”
The UK’s vote to leave has cast doubt over the future of the project. In sectors such as trading and hedge funds, more than three-quarters of EU activity takes place in the UK, according to the think tank New Financial.
McGuinness said: “Brexit or no Brexit, the City of London knows better than most the advantages of closer European co-operation.”
The man who championed its creation — the former European Commissioner for Financial Stability, Financial Services and Capital Markets Union Lord Jonathan Hill — told Financial News in April that the CMU was “more urgent” without the UK’s involvement.
In tonight’s speech McGuiness said the resignation of “CMU figurehead” Hill immediately following the UK’s vote for Brexit “reminded us that things could get difficult”.
In a mid-term review of its ongoing CMU project, published in June, the EU’s executive European Commission set out a new nine-point plan for the development of the flagship initiative.
Valdis Dombrovskis, the Commissioner responsible for financial stability, financial services and the CMU, acknowledged “the scale of the challenge” ahead: “We count on the support of the European Parliament and member states to rise to it.”
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