Chancellor Philip Hammond said there will be no "race to the bottom" on standards and regulation in the financial services sector after Brexit.
Speaking at the annual dinner of TheCityUK, the lobby group for financial services, Mr Hammond said post-Brexit Britain would continue to work closely with the European Union to strengthen the global financial system.
He said: "There will be no race to the bottom.
"We will need intensive regulatory co-operation for rule-making to ensure parity of outcomes and we will need new mechanisms to address key cross-cutting issues, from dispute resolution to data protection.
"We will need a deep and comprehensive framework of standards that ensures unprecedented transparency and supervisory cooperation.
"It is only in this way that we can entrench and enhance financial stability that we can protect consumers and taxpayers and ensure that the open and cooperative system we have built together since 2008 is maintained and strengthened for the immeasurable benefit of the economies of both the UK and the European Union."
But he also warned that the European Union and Britain would both lose if there was not a single market for financial services across Europe.
Mr Hammond said: "A fragmentation of this European financial services market will only lead to poorer quality, higher priced services for business and citizens across Europe, including in the UK.
"And that, in turn, would erode the global competitiveness of firms across the full breadth of the EU economy.
"Paris and Frankfurt wouldn’t be the winners from a fragmented European market, it would be New York, Singapore and Hong Kong leaving Europe as a whole, weaker and poorer."
Earlier this year Mr Hammond expressed scepticism about whether after Brexit the UK should seek to align itself with the US, where President Donald Trump's administration has been discussing whether to cut regulation, rather than the EU.
He said the UK should not seek to align itself to a country which was about to change its regulatory framework in an "unpredictable" way.
The Financial Conduct Authority has also warned firms not to expect a "bonfire of regulations" after Brexit, saying many standards are now set globally and that business gravitates towards tough enforcement jurisdictions rather than lax ones.
damian.fantato@ft.com
