Prepared for everything

6. June 2017

Will the EU’s standing fall after Brexit – or will the alliance weather the exit unscathed? International guests met German financial experts in Frankfurt/Main.

Haendler im Handelssaal der Deutschen Boerse in Frankfurt am Main (Hessen), Foto: Frank Rumpenhorst

Haendler im Handelssaal der Deutschen Boerse in Frankfurt am Main (Hessen), Foto: Frank Rumpenhorst

It is the sound of the Frankfurt Stock Exchange: a subtle, constant clicking. The sound comes from the display panels on the walls of the trading floor and can be heard every time a share price changes: click-click, click-click. The panels are from the 1980s – whereas everything around them has been modernised, they were consciously not replaced by digital displays. A small piece of continuity in the otherwise so rapidly changing financial world. And the stock exchanges (and not only them) can expect particularly great changes with Brexit. What does it mean for the EU and how will Germany adjust to it? International journalists, academics and staff at foundations and think tanks got answers to these questions on a trip to Berlin and Frankfurt/Main.

Guests of the Visitors Programme of the Federal Republic of Germany met Niels Tomm, an optimistic and at the same time pragmatic man, at the Frankfurt Stock Exchange. “We are hoping for the best, but are prepared for the worst,” says the Head of Governmental Relations at Deutsche Börse with a view to the Brexit negotiations. It cannot be ruled out, he notes, that simply no consensus is found at the end of talks between the EU and Great Britain in March 2019. Until then, uncertainty will dominate anyway – “and uncertainty is never good for the financial markets.”

Frankfurt could benefit from Brexit

But could it not be the case that Frankfurt, as a financial hub, can benefit from Brexit? After all, many businesses will need to relocate from London to the EU. “There is indeed strong motivation in the community pushing for Frankfurt to gain,” states Tomm. “Some banks have already made the relevant decisions – I hope that continues.” It is still not foreseeable however whether there will be a single European financial centre in the EU of the 27, or whether operations will be distributed over several locations. In addition to Frankfurt, Tomm believes Paris, Dublin and Milan are possible locations.

Senada Šelo Šabić, a political scientist at the University of Zagreb, listens with interest. Her native Croatia acceded to the EU in 2013 as the most recent member. She has noticed a sense of disillusionment set in among many people in her home country since the Brexit vote. “There is a joke, where we Croats turn up at a party at 2 a.m. as the last guests and find that there is hardly any food or wine left and the first guests are already leaving.” However, she continues, with this attitude many Croats are missing the fact that saying yes to Europe mustn’t be equated with simply a cost/benefit analysis.

EU euphoria among candidates continues unabated

In contrast, there is continued great enthusiasm for Europe in Georgia, according to Ivane Chkhikvadze, who works there at the Open Society Georgia Foundation, a member of George Soros’ foundation network. More than 80 percent of the population view the country establishing closer relations with the EU positively, reported Chkhikvadze. It is a similar situation in Montenegro, states Marko Vešović, political editor at the Montenegrin daily “Dan”. Most Montenegrins likewise see the future of their country in the EU, he continues. The government hopes that Montenegro will be the next member; accession negotiations are underway.

Michael Best, Sprecher der Deutschen Bundesbank, in der Zentrale der Deutschen Bundesbank in Frankfurt am Main (Hessen) in die Runde. Foto: Arne Dedert/dpa

Michael Best, Sprecher der Deutschen Bundesbank, in der Zentrale der Deutschen Bundesbank in Frankfurt am Main (Hessen), Foto: Arne Dedert/dpa

The Euro is already a means of payment in the country – yet without a formal agreement with the European Central Bank (ECB). Vešović would like to ask the group’s next host expert what that would mean should the country accede to the EU: At the Deutsche Bundesbank the guests meet Michael Best. Today the long-time stock-exchange reporter heads communications at the Bundesbank. The Montenegro question is legally complex and provides plenty to talk about for the group of international experts. Just like the meeting’s other topics, namely the role of the Bundesbank in the Euro bailout packages and the German view of ECB policy.

“One stability factor will be lost”

At the trip’s next venue the main topics of discussion are the stability of the Euro, cooperation in as diverse a union as the EU, and the value of migration. What makes Goethe University Frankfurt’s “House of Finance” special is that a large proportion of its funding for research and teaching stems from banks and companies. In line with the motto “Science meets business”, the institution aims to be an open forum for exchange between the two fields.

Helmut Siekmann holds the Chair of Money, Currency and Central Bank Law there. With the aid of a few figures he clearly illustrates to the guests just how different the EU members are in terms of population size and economic performance, for instance. However, “such significant differences are often found in federal systems.” He doesn’t consider this to be a problem for the EU – unlike the UK’s exit. “The Brits are a stability factor. They don’t sign everything, but when they do approve something they are reliable – more so than France or Germany.”