Monday July 15, 2024

Europe be ready for post-Brexit influx of financial firms

Published : 26 Jun 2018, 02:17

Updated : 26 Jun 2018, 03:13

  DF-Xinhua Report
International Monetary Fund (IMF) Managing Director Christine Lagarde. File Photo Xinhua.

The European Union (EU) should enhance its regulatory and supervisory capacities to cope with the possible influx of financial firms from London to continental Europe after Britain leaves the EU, said International Monetary Fund (IMF) Managing Director Christine Lagarde here on Monday.

Lagarde made the remarks while delivering an opening speech at a two-day international conference held in Dublin to mark the upcoming 20th anniversary of euro, which was first introduced to world financial markets as an accounting currency on Jan. 1, 1999.

She said that after Brexit, many financial firms are expected to relocate outside Britain if they lose their passporting rights, a right which allows a financial company authorized in one EU state to sell services and products in another.

"In the near term, it is critical to ensure that regulatory and supervisory capacities are prepared for the influx of financial firms that will move to continental Europe and Ireland as a result of Brexit," she said.

The IMF chief told the participants at the meeting that "we meet at a moment when the EU and euro area are in the midst of difficult decisions about their future. Populist movements, from Brexit to the recent Italian elections, have called into question of the value of European integration."

She said that it has been a complicated journey full of difficult moments for the euro area over the last decades or so.

"At age 20, the euro area is more mature. Battle scarred, yes, but also stronger and ready to move forward," she said, adding that work was needed to enhance the euro area's resilience and secure its future.

"The euro area needs truly integrated financial and capital markets that allow companies to raise financing across borders more easily and support investment," she noted.

Lagarde also held a meeting with the Irish Prime Minister Leo Varadkar on Monday, during which she called Ireland to be prudent and plan for international economic shocks.

She said that the current employment rate and growth of the Irish economy is remarkable compared with the time when she first visited Ireland in 2013. However, she said the time to fix the roof is when the sun is shining, calling on the Irish government to set up a rainy day fund in case of next economic downturn.