, with effects also for investment and capital flows and potentially the structure of european financial markets. although, some european jurisdictions will potentially see considerable change in light of the uk ’ s exit, what is not anticipated is for a ‘ new london ’ to emerge. given more recent technological developments, it is unclear whether agglomeration effects are as important as they once were. the answer to that question will contribute to determining the extent to which financial services will fragment across a number of european cities. the rise and fall of venice and amsterdam shows that what determines the fortunes of ‘ capitals of capital ’ depends on their ability to cope with external shocks and global developments and ultimately their ability to adapt to the changing landscape of history. the future importance of the ‘ city of london ’ will therefore depend not only on the agreement between the eu and the uk, but also on how london will position itself in the post brexit world. 1 i would like to thank mark cassidy, donata faccia, micheal o ’ keeffe, james o ’ sullivan, and terry quinn for their contribution to my remarks. 2 see for example puga, d., & trefler, d. ( 2014 ). international trade and institutional change : medieval venice ’ s response to globalization. the quarterly journal of economics, p. 768. 3 / 4 bis central bankers'speeches 3 ibid. 4 see grygiel, j. j. ( 2006 ). great powers and geopolitical change. jhu press, pp. 51 - 87. 5 see cassis, y., & collier, j. ( 2010 ). capitals of capital : the rise and fall of international financial centres 1780 - 2009. cambridge university press, pp. 09 - 15. 6 ibid. 7 see ball, m., & sunderland, d. t. ( 2002 ). an economic history of london 1800 - 1914. routledge, p. 335. 8 see for example wright, w. ( 2016 ). the potential impact of brexit on european capital markets : a qualitative survey of market participants. new financial. 9 see davies, ronald b. and killeen, neill ( 2015 ). location decisions of non - bank financial foreign direct investment : firm - level evidence from europe, central bank of ireland research technical paper no. 4. 10 ibid., p. 5. 11 claessens, stijn, and van horen, nee

sharon donnery : brexit and global capital markets remarks by ms sharon donnery, deputy governor ( central banking ) of the central bank of ireland, at chatham house, london, 23 march 2017. * * * introduction it is a pleasure to be invited to chatham house to discuss brexit and global capital markets. 1 in my remarks today, i would like to first turn to history to better understand the emergence of centres for capital. i will then touch on what brexit may mean for the ‘ city of london ’ as a global market for capital. finally, i will address some of the potential macroeconomic implications of the uk ’ s decision to leave the eu and exit the single market, for both the uk and irish economies, and for ireland as a location for financial services. history of centres for capital the fortunes of centres for capital change. take the example of a world - leading commercial and financial centre of the past : venice. venice rose in status because it was able to make full use of its location, servicing important trading routes between europe and the east. by the fourteenth century markets for debt, and secondary markets for debt, equity, and mortgage instruments existed. 2 their development was accompanied by financial innovations such as bankruptcy laws distinguishing illiquidity from insolvency ; double - entry accounting ; deposit banking ; and a reliable medium of exchange – the venetian ducat. 3 however, the emergence of alternative trade routes with the discovery of the new world and vasco de gama ’ s voyage to india endangered the economic supremacy of the italian city. the venetians were not blind to the changing geopolitical landscape. to retain its importance as a leading trading and financial centre, venice encouraged the excavation of suez canal, but without success. 4 moreover, venice failed to modernise its naval force, which was not equipped to navigate in oceanic waters. the mediterranean soon lost its importance as european trade rerouted to the oceans, signalling the decline of the fortune of the italian city and the advent of new opportunities for the atlantic powers. subsequently, the netherland ’ s economic prominence led to amsterdam becoming the world ’ s leading trading and financial centre, from the end of the sixteenth century. however, the napoleonic wars, french occupation and relegation in terms of the financing of international trade and issuing foreign loans, led to a decline in its status as a ‘ capital of capital ’. it could not compete or adapt to competition from new centres such as london or paris.