UK government sues European Central Bank

Thursday, 15 September 2011 10:08

Britain is planning to sue the European Central Bank (ECB) over proposed regulations that would cut the City of London out of a financial services major market.

The row centres over changes outlined in a July policy paper, which would prevent some euro-denominated securities from being cleared outside the countries that share the currency.

A Treasury spokesman said: "This decision contravenes European law and fundamental single market principles ... That is why we have begun proceedings against the ECB through the European Court of Justice. The government wants to see this resolved swiftly and without involving the courts, but if necessary will not shy away from continuing legal action."

The move represents the first time any European government has sought to sue the ECB, the Treasury added.

Around 40 per cent of the world's over-the-counter derivative trading is based in London, which means several clearing houses based there would fall foul of the new rules.

"I don't think the UK has a foot to stand upon," Karel Lannoo, chief executive officer of the Centre for European Policy Studies, a Brussels-based policy group, told Bloomberg.

"Overnight liquidity is only given by the ECB to banks in the eurozone, and that's for financial stability reasons."

The ECB is just applying the same idea to clearing houses, he added.

Use the Myfinances.co.uk comparison tables to find the best deal on all types of insurance

• Tags:
• british
,
• european central bank
,
• government
,
• news