On 24 April 2018, the European Commission published a speech given by Vice-President Valdis Dombrovskis at City Week in London. Key points in the speech include:

  • the Commission is working at “full speed” to deepen and integrate capital markets across the EU, as part of its flagship project, the Capital Markets Union (CMU);
  • for the CMU the Commission’s goal is to have the building blocks in place by 2019, ahead of the next European elections;
  • the EU and UK have reached agreement on a joint legal text that covers large parts of the Withdrawal Agreement but important issues still remain to be dealt with (for example the Irish border and the governance of the Withdrawal Agreement). Mr Dombrovskis’ message to all parties – firms and supervisors – is that they need to continue their work to prepare for all scenarios; and
  • the Commission’s risk based approach and proportionate application of equivalence means that it can work for third countries with different levels of interaction with the EU financial system. The EU27 recently recognised this in a statement when discussing the future relationship with the UK. They also reiterated their support to build on and further improve equivalence.

In the final part of his speech Mr Dombrovskis states, “equivalence is not perfect, neither for firms nor for supervisors. But one should not make the perfect be the enemy of good. Equivalence has proven to be a pragmatic solution that works in many different circumstances, and it can work for the UK after Brexit as well.”