Silvia Calo and Valerie Herzberg from the Central Bank have said Europe’s financial services will be split up post-Brexit. This will mean London’s financial influence will shrink. But other cities will prosper, including Dublin – soon to be the biggest English-speaking city in Europe – Paris, Frankfurt, Amsterdam and Luxembourg.
Their report said: “The evolution of financial centres at home and abroad still has the potential to affect risks to financial stability in the future and continued work on these structural developments will be important.”
This would increase its assets to €610bn, which is a figure equivalent to twice Ireland’s gross domestic product.
They added Dublin’s banking sector could see an influx of funds up to 12.33pc of its current size.
Meanwhile, the non-bank sector, which is made up of investment funds, could potentially grow as much as €4.33tn from €4.15tn, according to the report.
The economists said: “The growth of the IFSC [International Financial Services Centre] – similar to non-financial multinational firms – may be changing Ireland’s risk profile.”
At the moment, London plays a big role in foreign exchange.
Banks in the UK average €10.7tn in assets.
That compares with €7.5tn for France or Germany and €543m in Ireland, the report said.
But the Central Bank is concerned that a financial services industry that is bigger than the size of an economy may bring more risks than benefits.
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They added finance is typically an unstable industry.
Irish finance minister Pascha Donohoe also warned a no deal Brexit could also be a “credible threat” to the future of Ireland.
“I believe that Prime Minister Johnson feels differently about the relationship between the UK and the EU and the future trust of that relationship to how Prime Minister May did.
He told BBC Newsnight: “I believe that a no deal Brexit and the United Kingdom leaving the European Union without a deal is a very credible and material risk now.”
“I feel that has added a new dynamic into where we are on Brexit.
“I have a real direct appreciation of what a no deal Brexit could mean for the island of Ireland and the Irish economy.
“As someone who lived in the UK and has deep links with the UK, I know what the consequences of Brexit could be.”
Chancellor Sajid Javid met his Irish counterpart to discuss Brexit after Mr Donohoe travelled to London earlier in the week on a “working visit”.
He told Mr Javid Ireland had no intentions of removing the backstop from the Brexit agreement.
He went on to claim the backstop was the best way of avoiding a hard border in Ireland….READ FULL STORY BELOW
Silvia Calo and Valerie Herzberg from the Central Bank have said Europe’s financial services will be split up post- Brexit. This will mean London’s financial influence will shrink. But other cities will prosper, including Dublin – soon to be the biggest English-speaking city in Europe – Paris, Frankfurt, Amsterdam and Luxembourg.