Post-Brexit: Pitching for Paris’ attractiveness as an integrated financial centre

Rise and fall of financial centres is one of the favorite topics of this blog. As we dabble through daily economics and finance, the slow and shifting trends of financial activity from certain places to another is quite fascinating.

Pre-Brexit, London was comfortably placed as despite maintaining  its own currency Pound, it was the centre of European finance. Post-Brexit, the future of London as a centre of European finance is being discussed.

London’s loss is being seen as Paris’ gain. The European Banking Authority headquarters has shifted from London to Paris. The French authorities have started making pitches to global financial to evaluate Paris.

In a recent speech, Banque de France (Central Bank) Governor, speaks of multipolarity and competition in financial centres:

Brexit was and remains bad news mostly for the United Kingdom but also for Europe.

As for now, there is one principle which in our view is the corner stone of the future agreement between the European Union and the United Kingdom – preserving the integrity of our common good, the EU single market. In practice, it means that we cannot separate access and rules and that UK‑based entities cannot get a European passport and access the EU single market if they do not fully comply with the single market’s rules and do not recognise the authority of the European Court of Justice. The City of London will of course remain a major global financial centre but will no longer be in the position to serve as the European financial hub. Against that backdrop, further integration of capital markets in the EU is all the more needed. Succeeding in that endeavour requires an integrated approach combining and coordinating the Juncker Investment Plan, the Banking Union and the Capital Markets Union to achieve a true “Financing Union for Investment and Innovation”.

This Financing Union will be built on the EUR 390 billion in annual surplus savings in the euro area.

Another consequence of Brexit is that a number of financial activities will be relocated within the EU 27. The competitive landscape between financial centres will therefore change even though we do not expect the emergence of a continental “City of London” but a more multipolar and specialised competitive structure. It is our collective responsibility to foster a competitive and fair ecosystem for international players; as we have a single rule book, this competition will exclude any regulatory or supervisory “race to the bottom”.

Paris already has a fair bit of financial infrastructure and changes to make things even better:

Against this backdrop, the Paris financial centre has many assets. Paris hosts one of the most developed capital markets in continental Europe, the first asset management industry, a leading bond market, the largest commercial paper market with NEU-CP and the largest private equity investor in continental Europe. Moreover, Paris offers an attractive pool of highly skilled staff in financial services. The French government and the French financial authorities, including the Banque de France, are also working together to facilitating the dissemination of sound and safe financial innovations and fostering the scaling up of sustainable finance. These investments are protected by a very resilient banking system, accompanied by consistent regulation.

Let me remind you that Paris is already home to the European Securities and Markets Authority and will soon host the European Banking Authority. In addition, the Paris Court of Appeal was granted an international chamber last February, with international commercial affairs falling within its remit. That will duly complete the Paris court organisation, which already includes an international chamber in its commercial court. Last but not least, let me stress that the French authorities are making sure that the Paris financial centre and its participants benefit from a streamlined and business-friendly regulatory framework, for instance in areas such as bond issuance and securitisation. Meanwhile, significant efforts have been made by the French government to alleviate the tax regime and social contributions of “impatriates.” Starting in 2016 under the previous government, they have been amplified by the new one, including on the eve of the business summit last January.

Nice bit..

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