When the United Kingdom decided to leave the European Union through BREXIT voting, it meant the biggest European capital market along with it. London city would be deemed as the biggest loss in the market of the remaining European members and therefore, a new strategy would be required for business markets. Furthermore, it has also been argued that a new policy brief could be designed in which all of the remaining 27 members markets could be joined with London for steady business. Well before the BREXIT, EU was committed to introducing more integration into their markets. It included less financial regulations, with a wide variety of taxation regimes, but the union of the capital markets needed various irregular changes within taxation laws and financial regimes. After Brexit, It will not be possible to create markets like Tokyo or New York, since London has a huge say for the formation of the biggest capital market in the market.
On the other hand, European markets are also in the fear of the asymmetric shocks, therefore there is a certain need of a cross border market that would enable these shocks to be shared among different parts of the world, and would not affect only the European countries. The European markets are also influenced by the regulators since they are not lending more but they are relatively making more capital. Therefore, a capital market union would be able to open a wide variety of doors for businesses and hence the influence by the banks could also be mitigated. Even then, the European businesses are very large and their funding needs cannot be met through the integration of the 27 members union in Europe. Therefore, there will be a requirement to collect funds, from outside of Europe, that is the main reason that global connectivity is the main solution to this problem.
There is a good tendency in Brussels to arrange and amend the relationship between the United Kingdom and the European Union. The 27 members union also realise that for the UK firms their consumers should be accessed, therefore they have to put some terms on the table before providing the required access to their consumers. On the other hand, a similar policy, where Switzerland has been pressured to sign a partnership treaty. That includes not extending the pressure to the stock market of the country. The main problem is, the EU has devised such laws that would not allow itself to discriminate the business of UK. Therefore, its requirements and rules cannot be ignored on any coast.
Therefore, whatever terms have to unfold, regardless of that situation EU 27 member states have to exchange information at regular intervals. There should be a deep discussion about the exchange of data and information, and legal policymaking has to be discussed on new issues, if they may arise. In the end, the deal of BREXIT will be mutually signed, but the EU will not be able to mutually accept the legal aspect of financial services. Therefore, the supervisors and regulators have to pursue institutionalized cooperation. Hence, Europe will not be able when it comes to capital markets and it will not regret to try the given options.