Brexit talks must be carried out quickly to limit uncertainties, ECB Governing Council member Francois Villeroy de Galhau said on Saturday (Jun 25), adding the City of London financial centre was at risk of losing its prized “EU passport”.
Many banks based in London rely on a so-called EU “passport” that allows them to operate across the bloc’s capital market unhindered.
The City of London will not be able to keep that passport if Britain leaves the EU’s single market of trade in goods and services, Villeroy de Galhau told France Inter radio.
“There is a precedent, it is the Norwegian model of European Economic Area, that would allow Britain to keep access to the single market but by committing to implement all EU rules,” he said.
“It would be a bit paradoxical to leave the EU and apply all EU rules but that is one solution if Britain wants to keep access to the single market.”
Central banks are efficiently dealing with the fallout of Thursday’s UK vote to leave the EU, said Villeroy, who is also governor of the French central bank, adding: “The euro is a solid currency.”
“What happened on Thursday is bad news, first of all for Britain,” he said. “Of course there will be negative consequences for the European economy but there will be much more limited than the negative consequences all experts forecast for the UK economy.”
Brexit does not put the French economy at any risk of contracting in the next quarters, he said, confirming past growth forecasts of at least 1.4 per cent for 2016.