If Paris Can’t Be Europe’s Financial Center, No One Can

The French want the European Banking Authority, bad.
By Rosss (Own work) [GFDL or CC BY-SA 4.0-3.0-2.5-2.0-1.0], via Wikimedia Commons

By Rosss (Own work) [GFDL or CC BY-SA 4.0-3.0-2.5-2.0-1.0], via Wikimedia Commons

Oh, Paris: Jamie Dimon casts a furtive glance in your direction and France grudgingly elects an avowed capitalist and former investment banker president, and suddenly it thinks it’s New York or Hong Kong. The European Banking Authority needs a new home, because its current home in east London isn’t going to be European anymore come 2019. The logical place to put it, of course, would be Frankfurt. After all, “Mainhattan” is already mainland Europe’s financial center, and the home of the European Central Bank and the European Insurance and Occupational Pensions Authority, which may be merging with the EBA anyway, as well as the early leader in the Brexit banking refugee league table. There are some obvious disadvantages, such as a lack of office space and the fact that it sucks, but given that the EBA employs all of 150 people and they are banking regulators, both issues seem surmountable.

What may insurmountable is a grand French hissy fit. Why, France has promised low taxes and more manageable labor laws, and only half of Frenchmen voted to break capitalism’s shackles on the working class last month. Why should not the City of Lights and Love also be the City of Finance Capital? And, and if we can’t have it then neither can you.

Because of the French objections, talks among the Continent’s capitals to move the banking regulator have taken a new turn, and now both Paris and Frankfurt are likely to be out of the picture because of the political controversy that comes with choosing either, according to officials familiar with the discussions.

That sound you are hearing is a thunderous chorus of “Merci beaucoups” being sent Paris’ way by the Belgians, Austrians and London bankers who like to shop on Sundays.

Brussels and Vienna have been informally favored by officials as the next best options.

Still, you can’t quite rule out the Germans, who have a strong history of getting their way, at least temporarily.

Germany hasn’t given up on the prospect of moving the EBA to Frankfurt. Officials say the European Central Bank would also support moving the bank regulator to the same city as its own eurozone bank supervisor, known as the Single Supervisory Mechanism, which is located in Frankfurt….

Europe’s executive arm, the European Commission, has no say in where the EBA will move, despite planning to put forward proposals before year-end that will retool the bloc’s supervisory architecture. The commission is considering merging the banking regulator with the EU’s insurance regulator, currently located in Frankfurt—which made the German city a logical fit to host the EBA….

Some officials say handing the EBA to Paris would go against the principle of fairly distributing authorities around the bloc. France already hosts the European Securities Markets Authority in Paris and the European Parliament is in Strasbourg.

France, Germany Battle to Host EU Finance Regulator Post-Brexit [WSJ]