Nouy said that ECB wants to make sure there is no room for regulatory "arbitrage" by banks relocating from the UK but is "concerned" by regulatory differences among EU member states. "There are limits to what the ECB can do, and we are concerned about that," Nouy said. "Banks coming to the euro area may exploit supervisory loopholes by carrying out bank-like activities through an investment firm or third-country branches, both of which are not supervised at euro area level, but rather at national level." She said the possibility that the fragmented regulatory and supervisory framework in the EU may play a role in bank decisions on where to relocate was "highly undesirable."
