How Bitcoin Could Save London Banks After Brexit
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Version 0 of 1. As many readers already know from previous articles, I am skeptical about the idea that Brexit would leave the U.K. economy relatively unharmed. I simply doubt that leaving the world's biggest trading block can be achieved while keeping all the advantages -- free movement of goods, services and capital -- and rejecting what the proponents of Brexit see as a disadvantage -- free movement of people. I get emails from readers telling me to cheer up, and believe me, I try. Today, for the first time since the vote, I found a piece of news that does indeed cheer me up: a Financial Times story revealing that big banks plan to create a new standard to clear and settle financial trades using blockchain, the technology supporting the Bitcoin electronic currency. This could potentially mean that the relatively new technology used by Bitcoin could make a significant difference to the outcome of Brexit for the U.K. economy, at least for one of the most important sectors: banking. First, a bit of context: one of the main reasons why virtually all the big banks in London -- the City, as London's financial services sector is known -- supported remaining in the European Union is the fact that clearing of euro-denominated trades must be done within the E.U. Leaving the E.U. will deal a blow to the U.K.'s financial services. I was among the first to warn about this danger in an article back in December. If you remember, the European Central Bank insisted in a rule issued in 2011 that clearing of euro-denominated trades should be done in countries that have the euro as their currency. London challenged the rule in court, arguing that it discriminates between E.U. members -- and it won. |