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Why Brexit Could Be Great For the EU

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London's financial districtPhotograph by Leon Neal—AFP/Getty Images

The UK’s exit from the political arm of the European Union isn’t the end of the world.

Contrary to what some might believe, the UK will not be leaving the common market; rather, it will just be leaving Brussels and its bureaucracy behind – two very different things. This break between the UK and its continental neighbors has been brewing for years and will most likely end up being in both of their best interests.

Over the short-term, though, panic and uncertainty will undoubtedly cause tribulations in the global markets. But things will quickly normalize as the smart money and the world’s central bankers step in to reassure the public that the situation is under control.

Traders in London, the smart ones, told Fortune overnight and this morning that they are using the kerfuffle over Brexit as a buying opportunity. They believe the European Central Bank will step in soon to prop up the euro following the Bank of England’s announcement earlier in the day that it stands ready to inject up to 250 million pounds into the UK banking sector. Those thinking long-term believe that this will cause the U.S. Federal Reserve to engage in yet another round of “quantitative easing” in a bid to weaken the dollar, which has grown wickedly strong in all this mess.

But after the initial shock fades, it will be up to the politicians in London and the various European capitals to decide how exactly Brexit will take place. While the process may take many years, the result will be a net positive for Europe, as it will now finally be able to move forward and pursue a path to greater political integration among its members. The UK will be part of the common European market but be free to be the UK in other areas of state.

Nevertheless, for a few misguided investors, Brexit is the sum of all their economic fears compounded in one shocking little package. “How could the UK leave Europe?” they ask. Well, actually, quite easily. The UK never truly committed to the idea of a single Europe, nor did it ever try to integrate itself completely into the European system, either. This noncommittal approach manifested itself in dozens of ways, from the UK’s failure to adopt the euro (and the metric system), to its insistence on keeping its borders in place by opting out of the Schengen accords. Sure, other nations have opted out of one major EU directive or another, but the UK has opted out of all the big ones and was vehemently against any further attempts of political or social integration. At the end of the day, the UK will always be the UK first, not second, and therefore it has always been a question of when, not if, the island nation would leave the EU to do its own thing.

To be sure, the British love having access to the $16.5 trillion single EU market, and the EU loves having them as well. This will not change – a deal will be brokered to keep the UK in the free trade zone. That may mean the UK will join Norway, Iceland, and Liechtenstein in the European Economic Area (EEA)—which has all the free trade perks with less of the political integration of a full EU membership. Or it may involve signing hundreds of bi-lateral treaties with member nations like the Swiss and their political-light EU membership. One thing is certain: the UK is not totally divorcing itself from Europe.

And stop worrying about the City of London getting hurt. London will remain the heart of European finance for as long as the British continue with their light regulatory touch. What possible reason would a bank have to move their best traders to Paris so they can be over-regulated to death? Being out of the EU will actually help, not hurt, the City as they will be able to strip off more regulations and return London to its status as the premier place in the world to trade outside the prying eyes of financial regulators, like the SEC.

Now, this isn’t great for those worried about financial contagion, but a weak regulatory scheme will ensure the City of London’s strength.

Being part of the common market means that the UK will need to adhere to some of the EU’s rules and regulations, but it will be much easier for them to get exceptions now that they aren’t trying to run the EU from London. The UK will most likely need to accept the EU’s four freedoms, including the “freedom of movement,” which allows EU citizens to essentially work and live wherever they want. But as with the opt-out clause with Schengen, the UK will surely broker a deal to limit the free movement of migrants into their country in exchange for unfettered access by the EU to the big British market.

The European Union will probably be the biggest winner here, though. This isn’t the end of the EU “experiment” – it is a new beginning. Finally, Germany and France can move forward in their long-standing goal to create a unified world power – one that can stand up to the U.S., China, and Russia. A common foreign policy, a common central bank, a common defense network, and a common fiscal policy are finally back on the table with the UK out of the picture.

To be sure, not all members will be as comfortable as others trading sovereignty for stability. Denmark and Sweden, for example, which are not part of the euro, may probably vote to leave before they bow to Brussels.

But that is fine – let them leave. This is the EU 2.0, and it will probably begin with those countries who have adopted or who are obligated to adopt the euro as their currency. All other countries outside of the eurozone club will need to decide if they are in or out. If they are out, they can go ahead and join the UK in the common market, keep their currency, and go back to their drab capitals and freeze. The key is for the eurozone countries to finally come together and fix their common problems and develop a unified policy to help move the continent forward and out of the monetary mess of the last decade.

International investors will only return to Europe in large numbers after they see some real progress on the integration front, not a second earlier. So, the EU should take this opportunity to cull the ranks of those members who stand to poison the well.

This is a historic moment in the EU’s short history. It is now up to the core EU members to take advantage of the UK’s absence to move the union’s agenda forward. The UK will be fine as a junior member of the club – it has been one for some time now. The rumbles of the market will soon fade and the long slog towards reconciliation will take place. So stop worrying. What is emerging now is a stronger and more independent Britain and a much stronger and more economically prosperous EU.