The German regulator BaFin has read the riot act to complacent EU officials in Brussels, demanding urgent action by the EU side to avert mayhem in the vast derivatives market after Brexit.

Germany’s shift in policy is a crucial gesture of support for the Bank of England, which has been warning for months that £67 trillion of interest rate swaps and other derivatives could be left in limbo if there is no post-Brexit arrangement.

The European Commission has so far stuck to their line that this is a problem for banks and financial companies to sort out for themselves even if there is a broader Brexit deal. It has brushed aside vehement pleas from European, US, and Asian banks that this is impossible. The chain-reaction from broken contracts could lead to a global financial shock.

BaFin’s president, Felix Hufeld, said warnings by the industry must be taken seriously. “It is almost impossible to fix that problem exclusively just by one side of the stakeholders involved, let it be the industry itself or individual supervisors,” he told Bloomberg Television at a forum in Frankfurt.

Mr Hufeld said there had to be “a solution on the political level” to avert serious disruption, entailing some sort of legislative or regulatory structure.