Towards Financial Autonomy: The Geopolitical Economy of EUR-Denominated Clearing Services Relocation

Abstract

This paper examines the factors influencing the relocation of EUR-denominated clearing services back to EU central counterparties (CCPs) by the European Commission. It adopts a novel security-centred approach to analyse this decision within the context of a fragmented geopolitical arena marked by uneven development in financial centres. Using the theory of Geopolitical Economy (GPE), this paper examines the implications and risks associated with financial dependencies and the pursuit of autonomy in the global financial landscape. It specifically addresses the risks posed by the dominance of UK CCPs, such as London Clearing House (LCH), in EUR-denominated clearing services and emphasises the EU’s need to bolster its financial autonomy and stability, mitigating these intricate risks in this process. Through this analysis, the paper contributes to the existing literature by offering a novel understanding of the geopolitical-economic factors influencing regulatory actions within financial services.