Eurozone attack on City of London is ruled illegal

The European Court of Justice today issued a judgment which rules as illegal an attempt by the European Central Bank to force British companies managing trades in euros, rather than pound sterling, to relocate to Eurozone countries.

The Court annulled the so-called Eurosystem Oversight Policy Framework published by the ECB, which requires central counter parties to be located in the Eurozone. The court found that the ECB does not have the competence necessary to unilaterally impose such a requirement on central counter parties involved in the clearing of financial instruments.

Kay Swinburne, Conservative spokesman on economic and monetary affairs in the European Parliament has been a prominent critic of the ECB move, as has Chancellor George Osborne and the British Government.

Today she welcomed the ruling and said: "This was a clear attack on the City of London which was illogical as well as unfair. Now the ruling makes clear the City of London remains the financial capital of Europe.

"While the European Commission is emphasizing that the Capital Markets Union has to apply to all 28 member states of the EU, the ECB has been acting as though the free movement of capital across the EU can stop at the edge of the Eurozone.

"London is recognized globally as the centre for foreign exchange trading. To suggest that one currency has to only be traded, cleared or settled in the state or currency area of issue was not just a threat to London, but a threat to all global financial centres. If the ECB were able to continue this protectionist policy, what would happen if other countries in the world did the same?

"This was the first of three appeals by the UK Government against this attempt to undermine the UK's position. The result of the next two judgements should also prove clearly and unequivocally in the interests of the European single market."

Share this article: