LONDON, Oct 24 (Reuters) - European Union banking regulators need temporary fixes in case UK-based banks face a cliff-edge after Brexit in 2019 and potentially create dangerous market distortions, Germany’s top financial regulator said on Tuesday.
Felix Hufeld, president of BaFin, said that coping with Britain’s departure “certainly won’t be a piece of cake”.
Given that five rounds of divorce negotiations between the EU and Britain have not made enough progress on what happens after Brexit, regulators must assume that Britain could be facing a “cliff edge situation”, he said.
Regulators will need “adequate” temporary solutions to avoid dangerous “distortions” in markets while entering the post-Brexit world, he told an event organised by zeb consultants in London.
“Things that can be tolerated at the start, for instance to avoid cliff effects, must be brought into an appropriate balance in the medium term,” Hufeld said. (Reporting by Huw Jones; editing by Jason Neely)