LONDON Feb 22 Requiring financial instruments
to be cleared in a country that uses the currency in which they
are denominated would bump up costs, Bank of England Deputy
Governor Jon Cunliffe said on Thursday.
Cunliffe said the clearing of a single pool of
multi-currency instruments, as done by LCH clearing house
in London, allowed the offsetting of positions to boost
"This reduces the costs of central clearing - costs that are
ultimately borne by the real economy - as well as allowing a
more efficient and effective management of the risks that brings
significant global financial stability benefits," Cunliffe said
in a speech in London.
"Requiring each of these instruments to be cleared in the
jurisdiction of the currency in which they are denominated would
simply render multi-currency central-clearing impossible."
Policymakers in the euro zone have said that the clearing of
euro-denominated derivatives, which LCH dominates, should be
moved to the single currency area after Britain leaves the EU.
"In central clearing, in settlement, in payments if we wish
to maintain the infrastructure to sustain an open and integrated
global capital market, we will need to build upon the
arrangements we have developed for supervisory cooperation and
co-ordination," Cunliffe said.
(Reporting by Huw Jones, editing by David Milliken)