LONDON, Feb 5 (Reuters) - The European Union's single market is "absolutely crucial" for embedding free trade in the 28-country bloc and should not be lost under EU reforms aimed at keeping Britain inside the EU, Bank of England Deputy Governor Andrew Bailey said on Friday.
"The single market is absolutely crucial," Bailey told a financial conference.
EU President Donald Tusk has made proposals aimed at changing how the EU works in a bid to persuade Britons to stay in the bloc in a UK referendum that is likely to take place in June.
Countries outside the euro zone could have leeway to tweak some bank capital rules to preserve financial stability under the Tusk proposals, a step other regulators worry could fragment the bloc's single capital market.
"There are very sensible words in those documents," Bailey said. "It's not about us going our separate ways."
If Britain left the EU, there would be no "bonfire of regulation" for banks in Britain, Bailey added. (Reporting by Huw Jones, editing by Marc Jones)