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Paris is lobbying for the bloc to have The City’s clearing houses barred from the EU’s markets by 2025. European affairs minister Clement Beaune said a “clear signal” must be given to financiers so that clearing moves from the UK to the continent. Mr Beanue said: “Either we consider that the clearing market will always be London-based, fine, maybe.

“Or we consider that there is a sovereignty issue in making a European market.

“We must say that there will be a time when clearing in the UK will stop.”

Clearing is a crucial part of the process of financial markets.

It is the process of updating the accounts of the trading parties and arranging for the transfer of money and securities between buyer and seller.

EU-based banks and other financial businesses can use UK-based clearing houses because Brussels has agreed to allow access on a temporary basis post-Brexit until 2025.

However, Mr Beaune wants the agreement to come to an end after 2025.

The European affairs minister said: “It is desirable that we set a credible horizon for building a eurozone clearing market.

“The worst thing is to not give a clear signal to the financial sector.”

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About a quarter of the trade settled in London clearing houses About is denominated in euros.

Last year, Andrew Bailey, the Bank of England Governor, said that efforts to drag the activity across the Channel risked undermining financial stability on the continent.

In September Mr Bailey said: “If they want to take a decision to break the clearing system up, it is important to consider the risks to financial stability that come with fragmentation.

“This is not an idle, ‘you would say that, wouldn’t you’ from the UK’s central bank.

“That is a real threat.

“We put clearing houses internationally so much at the centre of the ecosystem, deliberately so post-financial crisis, we have built up their resilience, we have just had a demonstration of that with the Covid crisis they have come through well, they have done what we wanted them to.

“We have got the architecture and framework of international standards, let’s put it to work.”

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