(Bloomberg) -- Europe needs to urgently address the risk that Brexit poses to trillions of dollars of financial contracts, Deutsche Bank AG’s head of regulation said after European Union authorities indicated that they wouldn’t take action.
The continuity of contracts has emerged as a major Brexit issue because existing agreements rely on firms having the authority to do business across the 28-nation EU. Once the U.K. leaves, those rights will probably fall away, leaving firms unable to service cross-border contracts.
“The clock is ticking and action to address cliff-edge risks is urgently required,” Sylvie Matherat, the German bank’s chief regulatory officer, wrote in an article published on the Eurofi website. A priority should be to “avoid legal risk on contracts continuing past Brexit,” she said. “Early clarity to provide regulatory certainty is essential.”
Matherat’s plea for action comes after EU financial-services commissioner Valdis Dombrovskis said on Tuesday that the private sector could solve the problem on its own. Regulators in the U.K. support the view of the financial industry, also calling on their EU counterparts to address such immediate risks posed by Brexit.
Matherat also said officials should make sure that banks can continue to move data internationally. “A smart and pragmatic approach to deliver regulatory certainty on these points quickly will mitigate hard Brexit risks,” she said.
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