European moves to set up a single super-regulator for banking could badly undermine London’s standing as a global centre, ministers are warning ahead of crucial talks this week.
Fears are growing that reforms billed as a solution to the eurozone financial crisis are a “Trojan horse” that could smuggle through anti-London regulations.
Under the plans, the European Central Bank would represent the 17-country eurozone and effectively call the shots for the whole of the EU — opening the doors to measures that would “discriminate” against the City. Prime Minister David Cameron will warn they are unacceptable to Britain in their current form when he meets EU leaders for a mini-summit on Thursday.
Firms trading in euro-denominated financial products could be forced to have offices in the eurozone. Another idea is to insist that all EU financial centres work to regulations set in euros — giving rivals such as Paris and Frankfurt added clout.
Mr Cameron wants non-euro countries, including Britain, to have a veto to prevent the 17 from abusing their power. However, German MEP Sven Giegold said: “That would be a de facto veto for Britain, which would reward countries who do not want to contribute to European integration.”
