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ECB's Nowotny: Brexit would hurt financial business in London

* Brexit would hurt City of London (LSE: CIN.L - news) in long term

* Financial business would shift to EU

* Brexit would cause short-term turbulences in markets (recasts, adds comments)

VIENNA, June 16 (Reuters) - European Central Bank governing council member Ewald Nowotny said a British exit, or Brexit, from the European Union after a referendum on June 23 would hurt the 'City of London', as businesses would move to financial centres in the EU.

Brexit would likely cause small short-term turbulences in the financial markets, but in the long term structural changes in the financial business landscape in Europe would be more significant, the head of the Austrian central bank said on Thursday.

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"The role of this financial centre (in London) will deteriorate, no doubt (in case of a Brexit)," Nowotny said at a panel discussion on the European economic and monetary union in Vienna.

In the mid-term, "it is to be expected that there will be a certain shift towards financial centres in the European Union," Nowotny said.

As for possible cash bottlenecks should Britain decide to leave the EU, Nowotny said that agreements between the ECB and the Bank of England will make sure both British and European banks will have enough liquidity.

Insofar as the European banking sector in general is concerned, Nowotny said that banking regulation had probably reached a peak and could be reduced. (Reporting by Shadia Nasralla and Kirsti Knolle; Editing by Louise Ireland and Raissa Kasolowsky)