By Huw Jones
LONDON (Reuters) – Weakening rules for banks and insurers after Brexit would be “anathema”, but Britain could change its style of regulating to respond faster to change, Bank of England Deputy Governor Sam Woods said on Thursday.
“So as far as the stringency of financial regulation goes, we at the Bank have a clear view of what would make sense for the UK in a post-Brexit environment: we should keep it calibrated roughly where it is now and have no desire whatsoever to weaken it,” Woods said at a conference in Switzerland.
Britain’s finance ministry, parliamentary Treasury Select Committee and the Financial Conduct Authority have begun reviews of financial regulation after Brexit.
The bulk of rules applied in Britain come from the European Union, and some lawmakers say Brexit would allow Britain to revise its rules to keep London competitive as a global financial centre.
Much will hinge on what form of access to the EU market Britain secures after it leaves the bloc.
Woods said it would be undesirable if Britain became a “rule-taker”, meaning it continued to apply EU rules in some form. The EU’s default system of financial-market access for foreign companies is based on their aligning with the bloc’s rules.
While Britain should not compromise on stringency, it could change the style of regulation, Woods said.
The EU favours detailed rule-making given the need to create a single rulebook across 28 countries, Woods said. In Britain, parliament has traditionally approved overarching changes, leaving the day-to-day application to regulators.
“Alternatively, we could adopt a hybrid approach which doesn’t replicate either of the pre-existing EU or British approaches,” he said. “Once you open this box, the possibilities are legion.”
(Reporting by Huw Jones, editing by Larry King)