On July 18, Valdis Dombrovskis, European Commission vice president for the euro and social dialogue, visited the Atlantic Council to discuss the state of European financial markets after the British referendum. Following the resignation of British Commissioner Lord Jonathan Hill, Mr. Dombrovskis took over the financial stability, financial services, and capital union portfolio. In his first appearance in his double capacity, Mr. Dombrovskis stressed the need to ensure financial stability after the uncertainty caused by Brexit as well as the need to continue deepening Europe’s capital markets and Banking Union.

• Mr. Dombrovskis will continue his predecessor’s agenda, building on his work to deepen Europe’s capital markets to work towards a European Capital Markets Union, and to strengthen the Banking Union.
• Ensuring financial stability after Brexit is the main priority at this time. Uncertainty stemming from Brexit could reduce the United Kingdom’s GDP by 1 percent to 2.5 percent by 2017 and 0.2 percent to 0.5 percent in the other twenty-seven Member States.
• If the United Kingdom wishes to maintain access to the Single Market, it will have to accept the European Union’s four freedoms: free movement of goods, services, capital, and labor. The first steps to define a new EU-UK relationship should be taken by the United Kingdom.
• The European Union’s banking sector is much more resilient than during the crisis, with supervision and resolution mechanisms now coordinated at the European level. Work continues towards a Banking Union with a proposal for a European Deposit Insurance Scheme and a common backstop to the Single Resolution Fund.
• Work to build a Capital Markets Union is also progressing with proposed venture capital legislation to build up financial scale and diversity. Work to reform securitization markets as well as to reduce differences between national insolvency regimes is also underway.
• Finally, the European Union and the United States are working to ensure stricter regulatory cooperation between the two countries, as well as implementation of the Basel III package.

Image: European Commission Vice President Valdis Dombrovskis for the Euro, Social Dialogue, Financial Stability, Financial Services, and Capital Markets Union (left) with John F. W. Rogers, executive vice president, Goldman Sachs & Co.