?Replacing the ? by the Euro could mark the beginning of the end for London as a global financial centre. Having insisted that Hong Kong keep its own currency and therefore retain control of its successful financial system, Britain should not secure less for the City of London? Peter Lilley, Deputy Leader of the Conservative Party told the Foreign Corrrespondents Club in Hong Kong on 12th January.
?Britain ensured Hong Kong?s survival as a financial centre for Asia by negotiating its right to retain its own currency for the next fifty years, separate from the Chinese Renminbi – (indeed currently linked to the US$). Having a separate currency was essential if Hong Kong was to retain autonomous control over its own successful financial regulatory system.
?It would be absurd for Britain to keep less financial independence for ourselves than we insisted on for Hong Kong.
?Both London and Hong Kong became successful international financial centres – not because they were part of huge continental states – but because they developed a system of financial regulation which is light, flexible, trustworthy and open to the world.
?By contrast Frankfurt, Paris, Milan and other continental capitals failed to become global financial centres because they were stifled by more heavy-handed, inflexible, domestically orientated financial regulations.
?If a country ceases to have its own currency then as night follows day it will gradually lose the ability to regulate its own financial system in its own way.
?So if Britain lost its own currency I fear that it would be only a matter of time before the City was operating under a continental system of regulation. That would be bound to drive more and more of our business overseas.
?And it will not all go to the centres which have long suffered from the same handicap. So I imagine that financial institutions in New York, Zurich, and not least here in Hong Kong would rather relish that prospect!?