French bank governor calls for London to be sidelined

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London should be stripped of its status as Europe (Chicago Options: ^REURUSD - news) 's main financial hub and sidelined to allow the eurozone to “control” transactions within the 17-nation bloc, the governor of the Bank of France has said.

Christian Noyer told the Financial Times that there was "no rationale" for allowing the eurozone's financial centre to be "offshore".

"Most of the euro business should be done inside the euro area. It's linked to the capacity of the central bank to provide liquidity and ensure oversight of its own currency," he told the Financial Times in an interview.

"We're not against some business being done in London, but the bulk of the business should be under our control. That's the consequence of the choice by the UK to remain outside the euro area."

Mr Noyer's broadside is one of several outspoken public attacks that have been launched by French leaders on Britain.

Shortly before Standard and Poor's stripped France of its AAA credit rating in January, Mr Noyer said that Britain's rating should be cut before that of France as the UK had "as much debt, more inflation, less growth than us".

Jean Pierre Jouyet, the head of the French financial regulator, has also described the right wing of British politics as "the world's stupidest".

EU leaders meet on Tuesday to try to broker a deal on giving the European Central Bank (Other OTC: CBSU.PK - news) (ECB) sweeping powers to supervise lenders.

The move, which will not include Britain, will be the first step towards creating a banking union under which eurozone countries would eventually provide a common fiscal backstop.

While George Osborne, Britain's Chancellor, backs a union in principle, he has pressed for safeguards to stop the new bloc from forcing its rules on non-members.

Andrea Enria, the head of the European Banking Authority (EBA), has also urged leaders to protect countries outside a union from being sidelined.

Since the creation of the single currency, The City of London has served as Europe's main financial centre.

More than 40pc of euro foreign-exchange transactions are conducted in the British capital, a bigger share than the rest of the eurozone combined.

Set (KOSDAQ: 027040.KQ - news) up to coordinate the supervision of banks in response to the financial crisis, the London-based EBA is run by regulators from across the EU and is seen as a possible counterweight to the ECB's new supervisory role.