LONDON, March 10 (Reuters) - European authorities could notallow London to remain the trading centre for the euro ifBritain left the European Union, former Bank of France GovernorChristian Noyer said on Thursday.
In an article for economic think tank OMFIF, Noyer, who wasone of the European Central Bank's most senior figures untillate last year, sent the latest warning that the euro zone wouldtry to wrestle more control of trading back from London.
The volume of euro-dollar trading alone was some $640billion a day in London last year and traders in the Cityfinancial district now buy and sell more than twice as manyeuros as the whole 19-member euro zone.
"If Britain left the EU, the euro area authorities could nolonger tolerate such a high proportion of financial activitiesinvolving their currency taking place abroad," Noyer wrote.
"It is already very difficult for euro members to acceptthat our currency is largely traded outside the currency area,beyond the control of the ECB and of euro area institutions suchas market regulators."
The head of London-based HSBC, the world'sfifth-largest currency trader and Europe's biggest bank byassets, has already said it could move around 1,000 employeesfrom London to Paris should Britain vote to leave the EU in aJune referendum.
The currency market's second biggest player, Deutsche Bank, has also said it may cut its British operationswhile industry lobbyists say several other banks are mothballinginvestments until the outcome of the referendum is known.
More than 40 percent of the roughly $5 trillion per day offoreign exchange traded globally by banks, companies andinvestment houses passes through London.
The ECB has already attempted to require clearing housesthat deal with large amounts of euro denominated securities,such as LCH.Clearnet in London, to shift to the euro zone, butthis was rebuffed by the EU's top court in Luxembourg.
"When tensions occur and risks materialise, the interests ofa foreign financial centre might take priority over those of thecurrency area itself," Noyer said in the article.
"That can be acceptable only if, and as long as, the UK is amember of the EU, and accepts the involvement of, andco-operation with, the European regulatory agencies." (Writing by Patrick Graham; Editing by Catherine Evans)
HSBC Holdings (HSBA)
