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BOF Chief: Post-Brexit EU Financial System More Competitive

     TOKYO (MNI) - The European Union's financial system will be more
competitive post-Brexit by integrating financial institutions into a single
market, Banque de France Governor Francois Villeroy de Galhau told a financial
forum here.
     But Villeroy de Galhau also said the EU member countries must implement
structural reforms to support job creation without too much dependence on
monetary stimulus.
     Policymakers must stay vigilant, he said, but "There is no financial bubble
in Europe."
     Both France and Japan must work toward free trade and avoid protectionism,
as it would increase poverty, he said.
     The eventual departure of Britain from the EU is "bad news, above all for
our British friends" but it also creates an opportunity for EU member economies,
Villeroy de Galhau said.
     "The post-Brexit financial system in the EU will certainly be less
concentrated than it is today and more competitive," he said. "The savings of
the EU-27 member states will be increasingly handled within the single market,
given its significant size and the safety of its rules."
     "This means we will move towards some degree of 'Europeanisation' for
wholesale banks, insurers and asset managers," the BOF chief said.
     Bank of Japan Governor Haruhiko Kuroda also told the forum that he hopes
the current multilateral trading system will be maintained, saying  the central
bank will keep an eye on the risk to the economy posed by the protectionist
sentiment in some countries.  
     The EU must be well prepared for Brexit to avoid any potential cliff-edge
effects, particularly in the area of regulation, Villeroy de Galhau said.
     Noting the European Central Bank's latest forecast that the EU economy will
grow at least 2.2% this year, he said accommodative monetary policy supported
"this acceleration in the euro area, also allowing an uptick in underlying
inflation."
     But he also urged caution, saying, "Monetary policy should not be
overburdened and there is an urgent need for structural reforms that support
employment in each country as well as in the euro area as a whole."
     Concluding his speech, the BOF governor said, "We should be confident that
the current favorable economic winds are strong, as the monetary policy is
efficient and the European economic recovery is robust."
--MNI Tokyo Bureau; tel: +81 90-4670-5309; email: max.sato@marketnews.com
--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com
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