Treasurer Scott Morrison has warned the European Union off trying to punish the UK for Brexit saying any clampdown on Britain's financial system would likely ricochet around the world.
Suggesting that higher global interest rates could be one consequence of any reprisal, Mr Morrison urged negotiators between the two sides to recognise the importance of maintaining open and free markets.
"Any reduction in financial system efficiency and liquidity within and between the EU and UK would have implications well beyond Europe," Mr Morrison told a Group of 20 conference in Wiesbaden, Germany.
Imposing restrictions such as limiting where euro currency transactions can take place would likely drive up risks and costs for the European Union and beyond, he said.
"Within an open single market the UK has developed into a major trading hub for euro-denominated transactions," he said.
Mr Morrison cited Bank for International Settlements estimates that the UK accounts for 75 per cent of global trades in euro-denominated interest rate derivatives.
"We must recognise that a punitive or restrictive set of new arrangements will have far greater and more lasting implications than the immediate reaction to the poll result itself."
The comments are the latest rear-guard defence from the Turnbull government against a wave of anti-globalisation sentiment currently sweeping the western word following Donald Trump's election and last year's surprise UK vote to leave the EU.
Prime Minister Malcolm Turnbull was again forced on Australia Day to defend his ongoing support for the crumbling trans-Pacific trade deal, which the president has withdrawn from.
He also sidestepped questions about whether he would introduce legislation into parliament to ratify Australia's participation in the TPP, saying that would depend on the outcome of talks with other TPP member states as well as the Senate.
"My job as prime minister is to keep working - not throw in the towel on trade like Bill Shorten would do - but keep working using every connection, every angle, to open up more opportunities for Australian exports, in big countries and in smaller countries.
"Because every time there is a greater opportunity for Australian exports, there is going to be more employment in Australia. It isn't rocket science."
Mr Morrison said Australia's ongoing push to boost and support global free trade would include helping the EU and UK work through how they reconfigure trade and investment between themselves.
"We must all encourage the relevant parties to explore how the market can continue to operate efficiently and how the UK can continue to support that outcome," Mr Morrison told the audience.
"It is still well placed to provide what the European Central Bank refer to as the 'broadly appropriate guarantees for the supervision and oversight' of activities such as euro-denominated clearing and settlement."
The Treasurer was due to meet with European Central Bank officials in Germany overnight before flying back to England to meet the deputy governor of the Bank of England.
