"Does Brexit have to mean abandoning the benefits of free trade and open markets in financial services? It should not."
Speaking today at a Thomson Reuters Newsmaker, Bailey said the economic and financial cost of losing open markets "is too great to be justified and is not a necessary response to the choice of Brexit".
He added that there is "ample evidence" that open markets in financial services can exist safely without common detailed rules and shared regulatory institutions.
However he stressed that "strong co-ordination" between the UK and the EU was vital, pointing to four necessary permanent features: comparability of rules, but not exact mirroring; supervisory co-ordination; exchange of information; and a mechanism to deal with differences.
Bailey also noted the importance of transitional arrangements "which allow for a smooth path to the new post-Brexit world".
Bailey continued: "When I hear people say that firms need to re-locate in order to continue to benefit from access to EU financial markets, I start to seriously wonder. Does Brexit have to mean abandoning the benefits of free trade and open markets in financial services? It should not.
"We have built effective structures around supervisory colleges in the EU and globally, and at the FCA we have over one hundred Memorandums of Understanding with other regulators around the world. We should continue this work with a strong commitment. This is another lesson of the financial crisis that we should not jettison."
