Almost every day another story appears in the ongoing tug-of-war between Europe and the UK over euro clearing. And, of course, the story is given extra poignancy when viewed through the varifocal lens of Brexit. But in this instance what exactly does “relocation” mean? Especially when we are talking about a global currency like the euro. Listening to the politicians, it sounds as if they are insisting that the whole industry will be forced to move lock, stock and barrel to somewhere in Europe. This is so impractical as to be almost laughable when you consider the people, technical cultural, legal and language issues. Also, if the euro politicians really are determined to protect their precious currency then they will either be on the other end of reciprocal actions from the US or end up localising the euro and reducing its significance on the global stage. Neither of which is a good outcome for the citizens of Europe, let alone anywhere else.
When all is said and done I expect there will be some more oversight over euro clearing from Brussels, but as the reach of MiFID II stretches pretty far these days that’s hardly anything new. There is nothing wrong with well thought through rules that make markets safer and more transparent as this allows the good firms to thrive. But when it gets caught up in political posturing and polemic then everyone suffers – even the politicians themselves.