By Huw Jones

LONDON (Reuters) – Scrapping a cap on bankers’ bonuses inherited from the European Union is not a top priority and other curbs on remuneration aimed at fostering financial stability should not be weakened, Bank of England Deputy Governor Sam Woods said on Thursday.

There are hopes that the EU’s most burdensome rules will be relaxed after Britain leaves the EU.

After having previously opposed the EU’s cap that limits bonuses to not more than two fixed salaries, the finance ministry has begun to review the matter. The EU approved the cap in order to encourage higher base pay.

Woods said that they have not been a fan of the bonus caps. The bonus cap is law, and we don’t consider it to be a top priority.

Woods leads the Prudential Regulation Authority (NYSE:), the BoE branch that regulates banks. It ensures compliance with regulations like the cap.

It could prove politically challenging for the government to scrap the cap, especially at a moment when many are in financial distress due to COVID-19’s devastating effects on the economy and jobs.

Other countries have also implemented curbs like deferring a portion of bonuses and clawback to recover bonus money if bankers are involved in misconduct.

Woods indicated that “I don’t believe we will ever wish to lessen our pay practices.” Woods said, “Deferral and clawback, as well as malus, are all good things that we need to keep.”

Both bankers and lawmakers want regulatory bodies to ensure London remains a competitive financial center.

Woods expressed concern that Prudential Regulation Authority should keep its main focus on financial stability.

If you lose that focus you will be in trouble. It can also damage our reputation and reputation among other authorities.

Britain’s vast financial services sector is largely exempt from EU membership since last December’s full Brexit. This has resulted in thousands of job losses and billions of dollars of daily trading out of London.

Woods stated that the UK is now on an unidirectional path to adapting its rules to the EU’s financial markets, as the EU will not grant Britain access.

He said that the impact of Brexit on the financial industry so far was “modest”, and that it would take some time for the UK to experience the “upside” from greater rulemaking autonomy.

The Brexit impact will diminish with time, as there is so much more to do.