The U.K.’s exit from the European Union will be a watershed moment for the City of London and weaken its role as one of the world’s leading financial centers, Bundesbank Executive Board member Joachim Wuermeling said on Thursday.

Speaking in Frankfurt, he predicted Brexit would lead to higher costs for European companies by reducing the range of available financial services, weaken productivity and reduce market depth. There is also no guarantee that Britain’s departure from the EU would spur an exodus of banks to the continent, he said.

“London will not, as some have suggested, maintain its current role as the financial center of the EU after Brexit,” Wuermeling, who is responsible for financial-market operations at the German central bank, said in his speech. “Even with the best will in the world, there is no substitute outside the EU for the freedoms, rights and obligations that come with being part of the single market.”

Determining the role of London in Europe’s post-Brexit financial landscape is becoming increasingly important for policy makers and bank executives ahead of Britain’s departure from the EU next year. Around 43 percent of all euro trades on the foreign-exchange market are handled in the U.K., and London accounts for 70 percent of trading in euro-denominated interest-rate derivatives.

Not Champions League

It is unlikely that any city in continental Europe could take over London’s role after Brexit as they lack London’s current heft to handle global transactions, said Wuermeling, adding that other financial centers of the world may emerge as real winners of Britain’s divorce from the EU.

“Frankfurt, Paris and Amsterdam are by no means in the second division in this tournament, but neither are they candidates for the Champions League,” he said in his speech at the Goethe University in Frankfurt. “New York, in particular, could well benefit from Brexit, as could other global financial hubs such as Singapore or Hong Kong.”

In the case of Europe, Brexit could have a negative impact for already fragmented funding channels, and “from the point of view of financial-market efficiency, financial-market integration, financial stability, but also real economic development, a scenario such as this is clearly harmful,” he said.

To counter that, Europe should seek to develop a digital infrastructure to better connect its financial centers and be able to match the “agglomeration effect” that London currently enjoys, according to Wuermeling. It should also further harmonize its legal frameworks to reduce costs of cross-border transactions.

Asked whether London’s central role in European finance could result in post-Brexit market volatility, Wuermeling said “we don’t see turbulence, we don’t see crisis. What we do see is that the functionality in certain asset classes will to an extent be limited in the case of a hard Brexit.”