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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