European Union and U.K. authorities must agree on a political solution to the threat Brexit poses to trillions of dollars in derivatives and insurance contracts, according to Germany’s top financial regulator.
BaFin president Felix Hufeld said that the industry is in a state of dismissal with policy makers who say the EU can not solve the problem alone and that the EU government does not urgently need government action. Their views will help policy makers to resolve the issue and to ensure that contracts can continue after Brexit.
“It’s almost impossible to fix this problem only by one side of the parties, the industry itself or the individual auditors,” Hufeld told a Thursday Bloomberg Television interview. “I prefer a regulatory or legal solution to solve the problem.”
Hufeld said that it was “one of the biggest challenges” and that “there must be a solution at the political level” to ensure security.
As a matter of fact, if companies leave the EU without a specific agreement to ensure that the EU has the authority to do business in both markets, the companies have the authority to continue the contract. Without these permissions, companies may not be able to receive service contracts.
The Bank of England has repeatedly stressed that the problem of “contractual continuity” can not be solved by the private sector. The BOE said that the 96 trillion liras ($ 125 trillion) derivative contract is at risk.
The European Commission, the executive body of the EU, said that it did not see a “general quality problem” related to financial contracts because its existing obligations could continue “in principle”. To prove Brexit’s existing contracts.
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