hub for their continental european business. the debate on market access was transformed in mid - january. prime minister may made it clear that the uk is looking for a clean break from the eu ’ s single market. for the financial industry, this means that the current model of using london as a gateway to europe is likely to end. banks from third countries need a licensed entity inside the european economic area to gain access to the whole area, known as “ passporting ". shortly before the prime minister ’ s speech, cityuk already dropped demands for maintaining access through passports. instead, many are now hoping for an equivalence decision to fill the gap left by passporting rights. if the european commission deems the regulatory and supervisory regime in the uk to be equivalent to that in the eu, market access would be partly retained. however, i am rather sceptical about whether equivalence decisions – may they be likely or not – offer a sound footing for long - term location decisions of banks. equivalence is truly different from single market 1 / 5 bis central bankers'speeches access. there are three major drawbacks to equivalence decisions. first, they only cover the wholesale business of banks. second, given the fact that banks need time to build up a new entity elsewhere, an equivalence decision would have to be taken quite soon to actually have a bearing on the location decisions of banks. third, equivalence decisions are reversible, so banks would be forced to adjust to a new environment in the event that supervisory frameworks are no longer deemed equivalent. these drawbacks lead me to the overall conclusion that equivalence decisions are not a reliable substitute for passporting. so it seems that the prospects for eu market access through the uk look rather dim. to ease the pressure on financial institutions, a transition period could help. it would reduce risks and increase planning security for banks, which would be economically beneficial. furthermore, it could support a smooth relocation process by taking pressure off both supervisors and banks, for example by making " first mover advantages " less important. this being said, transition periods would be a politically sensitive topic in the negotiations, and it is unclear how likely such an agreement might be. as mentioned earlier, we should not forget about the access of european banks to the uk, which is also an important issue. for german banks, for example, the uk is the second - most important foreign market, right after the us. it will be up to the uk prudential regulation authority to decide under what circumstances

andreas dombret : the possible impact of brexit on the financial landscape speech by dr andreas dombret, member of the executive board of the deutsche bundesbank, at zeb ( consultancy for financial services ), london, 24 february 2017. * * * 1 introduction ladies and gentlemen, good morning. i hope that you enjoyed the breakfast buffet. i am sure that what one says about the quality of breakfast in england is not true here at the new zeb office. now that you have started the day energised after a good meal, i want to provide you with some thoughts on a most topical issue – something else to chew on, so to speak. i am talking, of course, about brexit. even though this is by no means a new issue, and the element of surprise that it had in june last year has vanished, it still attracts tremendous attention. after all, it is what made all of us gather here today. and there are many reasons why brexit is still attracting so much attention. among them are the profound impact it might have on the world we live in, and the intense uncertainty surrounding its precise effects. this combination of significance and uncertainty makes brexit a topic well suited for speculation about what might happen. and if you have followed the topic closely, you have probably noticed different and even opposing statements on the same question. but speculation doesn ’ t help. what makes more sense is scenario - based thinking. today, i will try to set some things straight – at least regarding the financial sector. the first part of my remarks will therefore cover the potential impact of the brexit on the financial sector. in the second part, i will look at the bigger picture and share with you my expectations for the negotiations as well as my thoughts on the future of regulation and supervision in the eu and the uk. 2 the possible impact of the brexit on the financial landscape let ’ s start with the potential impact of the brexit on the financial landscape. first and foremost, this means talking about market access. we should not forget that this is a two - way street, and so i will talk about market access in both directions. but the centre of attention is certainly on market access for uk based financial institutions to the eu, as this potentially has the largest impact for banks and other financial institutions. it affects all institutions, both from the uk and the rest of the world, which currently use london as a