BRUSSELS : The extent to which British regulators can write their own banking rules remains a stumbling block ahead of a summit of European Union leaders on Thursday that will try to thrash out a deal to keep Britain in the bloc.
The latest draft seen by Reuters of Britain's "new settlement" with the EU shows disagreement over the conditions for granting leeway to national regulators whose currencies are outside the euro zone.
Where negotiators had hoped to settle issues of economic governance before the summit, the final draft leaves a key section on financial regulation in square brackets, indicating it will be thrashed out at the top political level.
Britain plans to hold a referendum, probably in June, on whether to stay a member of the EU and the draft, which maps out a new deal with the EU, is aimed at persuading Britons to stay in the 28-country bloc.
The draft says regulators outside the euro zone, such as the Bank of England in London, are responsible for supervision of their own banks and markets when it comes to preserving financial stability.
But this is subject to two conditions which lawmakers in Britain have said negates the freedom being offered.
The latest draft still says that a regulator such as the BoE must take into account the "requirements of group supervision" - a reference to the European Central Bank, which is the group supervisor for the euro zone's top lenders which have operations in London.
Secondly, "this is without prejudice to the development of the single rulebook" and to "the existing powers of the Union institutions and relevant Union bodies to take action that is necessary to respond to threats to financial stability," the draft text says.
The ECB would be included in a list of relevant union bodies, adding to concerns over the scope for the BoE to regulate its own markets.
(Reporting by Huw Jones; Editing by Keith Weir)
The latest draft seen by Reuters of Britain's "new settlement" with the EU shows disagreement over the conditions for granting leeway to national regulators whose currencies are outside the euro zone.
Where negotiators had hoped to settle issues of economic governance before the summit, the final draft leaves a key section on financial regulation in square brackets, indicating it will be thrashed out at the top political level.
Britain plans to hold a referendum, probably in June, on whether to stay a member of the EU and the draft, which maps out a new deal with the EU, is aimed at persuading Britons to stay in the 28-country bloc.
The draft says regulators outside the euro zone, such as the Bank of England in London, are responsible for supervision of their own banks and markets when it comes to preserving financial stability.
But this is subject to two conditions which lawmakers in Britain have said negates the freedom being offered.
The latest draft still says that a regulator such as the BoE must take into account the "requirements of group supervision" - a reference to the European Central Bank, which is the group supervisor for the euro zone's top lenders which have operations in London.
Secondly, "this is without prejudice to the development of the single rulebook" and to "the existing powers of the Union institutions and relevant Union bodies to take action that is necessary to respond to threats to financial stability," the draft text says.
The ECB would be included in a list of relevant union bodies, adding to concerns over the scope for the BoE to regulate its own markets.
(Reporting by Huw Jones; Editing by Keith Weir)
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