Michel Barnier and City of London Regulation

City of London bankers are troubled by the nomination of a Frenchman, Michel Barnier, as the European Union's next internal-market commissioner. The worry: if Barnier is approved for the post, he will have little sympathy for London's famed light-touch approach to market discipline. In the words of William Hague, the Tory spokesman on foreign affairs: "Our French partners have a different view on market issues that touch on Britain's vital economic interests."  

But the objections miss what's real­ly happening in the regulation wars. Two months ago the European Commission put forward a detailed set of proposals based on a report drawn up in the aftermath of the economic crisis by former IMF director-general Jacques de Larosière. Member governments have given broad agreement to the principles, which include the creation of three EU supervisory bodies covering pensions, banking, and securities, and in time a single regulatory rulebook covering every European financial center. As consolation, London looks set to host the new banking authority. Karel Lannoo, of the Brussels think tank the Centre for European Policy Studies, says that in the future "the difference between European financial centers will be less and less about regulatory standards and more about competitiveness and efficiency." 

That means Barnier's job will be to oversee a European policy across the EU, not to impose a French view of the markets on London.