Brexit news – £20 TRILLION held in British banks – what happens if EU laws fail? | City & Business | Finance

Brexit news – £20 TRILLION held in British banks – what happens if EU laws fail? | City & Business | Finance

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The mind-blowing figure of £20 trillion is what Britain’s financial institutions hold in complex financial instruments called ‘derivatives’.

EU financial institutions hold another £20tn of derivatives with a U.K. element.

Derivatives are basically an Investment in the predicted future price of certain materials like oil.

But they rely on similarly complex cross-border laws and agreements.

The mind-blowing figure of £20 trillion is what Britain’s financial institutions hold in complex financial instruments called ‘derivatives’.

EU financial institutions hold another £20tn of derivatives with a U.K. element.

Derivatives are basically an Investment in the predicted future price of certain materials like oil.

But they rely on similarly complex cross-border laws and agreements.

Now the Bank of England has issued a warning that the derivatives Market may seize up without legal certainty when the UK finally leaves the EU.

Sam Woods, a Bank of England (BoE) deputy governor has said that a bilateral deal as part of the UK’s Brexit plan is the bank’s ideal solution to the legal ramifications brought on by our divorce to the union.

But so far there is nothing.

 

 


A no deal Brexit would not necessarily void these contracts as Woods told a House of Lords select committee yesterday.

However, certain problems may arise when a client tried to use an option on a derivative contract.

A no deal Brexit may also makes it illegal for a UK insurer to pay out on a policy held by a European customer after Brexit.

Woods told the Financial Times: “ By far the best fix would be for something to be included in the withdrawal agreement. There would have to be bilateral agreement to fix this on both sides.”

He said that both the UK and the EU need to deal with this factor to avoid this damaging consequence if the deal is issued in a unilateral sense.

Woods warned that according to the Prudential Regulation Authority job losses at banks and insurers could reach 10,000 on the first day of Brexit. 



Source: Express.co.uk

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