UNITED KINGDOM (OBSERVATORY) – The existing system of access to markets for foreign financial firms in the EU is not ideal, but it can work in Britain after the country leaves the block next year, the head of the EU financial sector said.
The so-called equivalence system is based on the fact that Brussels provides access to the EU to banks, insurers and asset managers from outside the block, if the bloc considers its home rules to be quite similar.
But Britain said that equivalence is too one-sided and requires an individual bargain for banks based on mutual recognition of the UK or the EU accepting each other’s rules.
Valdis Dombrovskis, vice president of the European Commission and responsible for financial services, said that equivalence was a pragmatic decision for Britain after the country left the EU.
“Equivalence is not ideal for either firms or regulators,” Dombrovskis said at a conference in London. “But we must not allow perfection to be an enemy of the good.” Equivalence was a pragmatic solution that works in many different circumstances and it can work in the UK after Brexit “.
EU leaders in March agreed that “improved” equivalence could become part of future trade negotiations with the UK for financial services.
Dombrovskis said that this means adapting equivalence to a country that is systemic for the EU. The UK is the largest financial center in Europe.
“Despite these improvements, there are some clear limits of equivalence,” the official said.