New Threats to London's Euro-Dominance

Keith Boyfield writes for the Wall Street Journal

Although the U.K. is outside the euro zone, London is by far the leading player in euro-denominated financial markets. More than twice as many euros are traded in Britain than in all the euro-zone countries combined. Over half of all derivatives traded in the U.K. are euro-denominated, more than sterling- and dollar-denominated business put together.

All of this helps London maintain its pre-eminence as a global financial center, and brings with it considerable benefits to the U.K. Yet it is looked on with envy by many in the euro zone who believe that euro-denominated markets should be located in the euro-zone countries—and are busy looking for ways to reduce Britain's market share.
To take one topical example, London could lose the key euro-denominated business of post-trade clearing. This refers to all activities from the time a commitment is made for a particular trade until the trade is settled. Clearing is a vital part of efficient and honest markets, since people need to know that commitments made as a result of particular trades will be honoured.
This article originally appeared in the Wall Street Journal. Continue reading here.

Invest in the IEA. We are the catalyst for changing consensus and influencing public debate.

Donate now

Thank you for
your support

Subscribe to