The British and US governments have announced a new financial innovation partnership (FIP) to boost the finance sectors in both countries and create closer regulatory ties.
The deal between the US and UK treasuries will “build on and deepen bilateral engagement on emerging trends in financial services innovation”, according to a joint statement this week.
The partnership will focus on building commercial and regulatory engagement. It will support entrepreneurs by providing regular opportunities for the private sector in one country to engage with industry associations and market participants in the other. At the same time, the two countries will extend their existing cooperation on financial services regulation and technical development.
Announcing the deal, Economic Secretary to HM Treasury John Glen said, “The United Kingdom and United States lead the world in financial services, and are at the cutting edge of innovative FinTech. By working more closely together through this new partnership, we can help firms in both our countries to go even further to harness new technologies, share expertise and serve consumers.”
Gilbert Kaplan, Under Secretary for International Trade at the US Department of Commerce, said, “The International Trade Administration is looking forward to participating in this innovative new partnership with the UK that will help drive bilateral financial services collaboration and expand opportunities for firms from both countries at the intersection of financial services, technology, and international commerce.”
Heath Tarbert, Acting Under Secretary for International Affairs at the US Department of the Treasury, added, “Technology is the future of financial services, and innovation drives growth. By jointly fostering entrepreneurial breakthroughs, we will write a new chapter in the longstanding friendship between America and Britain.”
The partnership was agreed last week at the second meeting of the US-UK Financial Regulatory Working Group in Washington, DC. The Group was formed to deepen the transatlantic dialogue as the UK withdraws from the European Union, suggesting closer alignment between the US and UK after Brexit.
Participants included senior staff from both treasuries, together with representatives from the US Federal Reserve, the Commodity Futures Trading Commission, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Securities and Exchange Commission, the Bank of England, and the Financial Conduct Authority.
Delegates discussed the outlook for regulatory reform, focusing on the potential impact of Brexit on financial stability and cross-border financial regulations.
Embarrassingly for the UK government, however, the meeting coincided with the publication of a report suggesting that New York has overtaken London as the world’s financial centre.
A survey of 183 senior financial services professionals from 15 countries by consultancy firm Duff & Phelps found 52 percent choosing New York as the world’s premier financial hub and just 36 percent London. In last year’s report, 53 percent chose London and 42 percent New York.
Brexit uncertainty was blamed for this perceived reversal in London’s fortunes, but there is worse to come, according to the report: just 21 percent of those surveyed said London would be the world’s financial centre in five years’ time, while 44 percent predicted it would be New York. Hong Kong, Shanghai, Dublin, and Frankfurt were all cited as strong contenders for the crown.
Meanwhile, Bloomberg’s regulated updated Brexit tracker reveals that nearly $1 trillion in banking assets have so far been moved out of London to either Germany or Ireland as fears grow over the UK’s exit from Europe and the government’s handling of negotiations.
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