Britain should put City of London under EU financial rules - Deutsche Bank vice chairman

It is no secret Deutsche Bank is not in love with the idea of a Brexit from the European Union. Rather, its vice chairman thinks the UK should strengthen its financial ties with the union and bring London finance under EU regulation.

"It would make sense that major aspects of the banking union would extend to the City of London," said Luc Frieden, vice chairman of Deutsche Bank, at University College London's European Institute on 18 June. "We need to move closer together if we want to do business together."

This is because 40% of London's financial services are exported to Europe, said Frieden, who previously represented Luxembourg at the European Council of Ministers of Finance and worked to stabilise the eurozone and shape the European banking union.

Before that he spent stretches as Luxembourg's minister of treasury and minister of finance.

EU finance ministers met today (19 June) in Luxembourg in an ongoing attempt to reach a deal on a Greek debt bailout before it defaults on a €1.6bn (£1.14bn, $1.8bn) loan from the IMF on 30 June.

These problems have made the UK sceptical about the stability of the eurozone, along with other questions around governance and sovereignty. One good thing about the upcoming referendum on EU membership in the UK is that it will promote a much-needed discussion, Frieden said.

"The debate that the UK must have is to see exactly what would be the alternative [of being part of the union]," he insisted. "Many people in this country look at the things that don't work."

There are positives to the union that get overlooked such as less inflation, price stability and peace in Europe, he pointed out.

He did acknowledge the eurozone's problems. However, for him, the answer is a tighter union with more powers for the EU. "We have an interest in sharing sovereign powers," he said, pointing out that if such tools were already in place situations like Greece's debt problem would not have occurred. Other countries would have taken the reins of its finances much sooner.

"We mainly need a new economic model for the eurozone," he said. "If those reforms are not being done, we come to a situation like in the past few years. The instruments have been put into place in a gradual effort to move closer together."

Maybe so, but "we need to think very, very carefully about what's happening in the union around people thinking about democracy", said UK Labour MEP Anneliese Dodds, who sits on the EU's Economic and Monetary Affairs Committee.

Thousands of Greeks have protested in Athens urging their government to stand up against the EU's demands for more austerity. And dozens of countries have seen protest movements and populist parties gain favour after austerity measures were imposed following the financial crisis.

This means that the EU needs to begin thinking about how its gains legitimacy. She said that trade unions and employers throughout Europe have not been given nearly the amount of access to the levers of power promised when the EU was founded with the Treaty of Maastricht in 1993.

Dodds cited a new €315bn pot to fund long-term investment projects in countries across the EU as the way forward. The "socialist position", she said, "has been to question the way in which structural reform has been interpreted".

If the UK wants reform, however, the "other 27 [member nations] also have to agree to those reforms", said Frieden. "It is not a one-way street."

Note: A correction has been made in the first paragraph to clarify that Britain is proposing a referendum to leave the European Union, not the eurozone.