Financial firms in the United Kingdom and the European Union must prepare for all possible outcomes of the Brexit negotiations, including the risk of a divergence in supervision that could affect the bloc's decisions on granting United Kingdom -based firms regulatory "equivalence", a senior EU official warned Tuesday.
"Equivalence is not ideal, neither for firms nor for supervisors", Dombrovskis told the CityWeek conference at the Guildhall in London, in the heart of the City.
"As Vice President in charge of financial stability, my message is that all parties - firms and supervisors - need to continue their work to prepare for all scenarios", Dombrovskis said.
Last month the Bank of England confirmed that lenders and clearing houses will be able to continue using existing passport rights to operate in the United Kingdom throughout the transition period until the end of 2020.
Valdis Dombrovskis, the EU's financial-services policy chief, said the private sector must take the lead in ensuring that existing contracts won't be disrupted when the United Kingdom exits the EU.
"So I want to get on with it, please", Bailey said.
Bailey warned Brexit risks were not limited to the UK.
The European Central Bank has signalled that it has no plans to make similar concessions, with its official guidance noting there is "still political uncertainty over whether there will be a transition period".
"But that does not stop authorities both here and in the European Union working together to mitigate the cliff-edge risks, even if we do not yet have a final agreement on what these arrangements will be". However, it is considered by many City firms to be less favourable than the current trading relationship, with passporting allowed by United Kingdom firms within the EU's Single Market.
"Equivalence is not ideal, neither for firms nor for supervisors".