As a third country, the UK is no longer involved in the development of EU legislation and regulation. As new challenges emerge, as EU regulation no longer needs to cater for the greater complexity and scope of risk and activity in London, and as the complex processes and structures needed to manage the regulatory framework within the EU are no longer needed in the UK, there may well be divergence. The issue, from a financial stability perspective, is how we will manage that to provide the necessary assurance on the import and export of risk on both sides. The EU needs assurance on financial stability risk once the UK is no longer subject to the EU framework. Indeed, as an importer of risk from EU jurisdictions, the UK regulatory authorities have the same need. And the degree of assurance is related to the degree of risk. Equivalence assessments are, in the words of the EU/UK Political Declaration, ‘autonomous’ matters for each side. But if we want the relationship to work, the following considerations matter. First, and I think self-evidently, the UK cannot outsource regulation and supervision of the world’s leading complex financial system to another jurisdiction. That argues against a relationship built on textual alignment of our regulatory frameworks.
We, here in Cyprus, know what a challenge is and how to overcome it. A country at the edge of the Mediterranean sea, has managed to place itself to the political and economic core of the European continent. A small island with a part of it under occupation, thrives thanks to its extroversion and its people, who despite having been put to the test so many times in the past, have never stopped creating, evolving and moving forward. I have no doubt that together with our European partners we will take all the necessary actions to overcome this challenge as well, guided by our common core values and principles. As the great French novelist Victor Hugo said, "Changez vos opinions, gardez vos principes; changez vos feuilles, gardez intactes vos raciness" "Change your opinions, keep to your principles; change your leaves, keep intact your roots". Here in Cyprus we often say that "a captain is proven capable when she is in a storm". And hence, I consider ourselves lucky since our ECB captain steering us through both the Covid and geopolitical storms is Christine Lagarde, a leader of undoubted capacity and experience, whom I thank again for being with us today and would like to invite her to the podium to share her thoughts with us. 3/3  BIS - Central bankers' speeches