In a convoluted speech at Mansion House this week, former Financial Conduct Authority head Andrew Bailey confirmed the generally-held impression that the United Kingdom is going to take a tough stance in any future discussions about financial services regulation with the European Union.

The title of the speech on the website of the Bank of England, of which Bailey has been Governor since March last year, is "The case for an open financial system," with the word "global" appearing 22 times. Bailey's argument seems to be that in order to remain a premier financial centre with truly global appeal, the UK must not remain hidebound by "regional" considerations. "Regional" is obviously a code-word for the EU.

The word "regional" appears five times in Bailey's speech, which ends emphatically with the phrase: "Now is not the time to have a regional argument." He said that the world economy must be a global, not a regional, regime to be effective. He said that the "public goods" of such a world economy should be the same.

Bailey had harsh words for the EU's regime of "equivalence," which only allows reasonably unfettered trade with outsiders in products and services regulated by various financial directives if the countries from which those products and services spring are adjudged "equivalent" to EU countries in the quality of their regulation. He said: "The European Union has pursued the approach of so-called equivalence, which on the face of it allows for deferring to other authorities where appropriate. The EU’s framework of equivalence in financial services is a patchwork across many different pieces of financial services legislation, taking different forms in different sub-sectors, and in some not present at all. Nor do the equivalence measures prescribe how the judgement should be made."

Bailey also pointed out that although the UK has granted equivalence to the EU in some areas, the EU has not reciprocated. In a few areas – involving central clearing and settlement – it has granted temporary equivalence to the UK in accordance with its second Markets in Financial Instruments Directive in order to keep things stable for the time being.

Bailey expressed a desire for the EU to base equivalence on global standards issued by bodies such as the Group of 20 industrialised nations or the Financial Action Task Force.

He added: "The EU has argued it must better understand how the UK intends to amend or alter the rules going forwards. This is a standard that the EU holds no other country to and would, I suspect, not agree to be held to itself."