Carney: UK financial system strong enough for Brexit
24 June 2016 London
Image: Shutterstock
Mark Carney, Governor of the Bank of England, has reacted to the UK vote to leave the European Union, saying that there will be no immediate change 鈥渋n the way our goods can move or the way our services can be sold鈥�.
The UK, which has been a member of the EU since 1973, will leave the union after 52 percent of voters opted for a 鈥楤rexit鈥�.
Carney said in a statement that, although 鈥渟ome market and economic volatility can be expected as this process unfolds,鈥� the treasury and the Bank of England have a contingency plan for an exit vote are well prepared to take additional measures as the market adjusts.
Noting that there will be a period of uncertainty and adjustment following the result, he said: 鈥淚t will take some time for the UK to establish new relationships with Europe and the rest of the world.鈥�
鈥淪ome market and economic volatility can be expected as this process unfolds.鈥�
Carney went on to explain that the Bank of England has worked on strengthening the UK financial system.
He said: 鈥淭he capital requirements of our largest banks are now ten times higher than before the crisis.鈥�
鈥淭he Bank of England has stress tested them against scenarios more severe than the country currently faces.鈥�
UK banks have raised 拢130 billion of capital and have 拢600 billion of high quality liquid assets, Carney said, meaning they have 鈥渢he flexibility they need to continue to lend to UK businesses and households, even during challenging times鈥�.
The Bank of England has and additional 拢250 billion of additional funds to support the markets through its 鈥渘ormal facilities鈥�, and can provide liquidity in foreign currency, Carney said.
These preparations are intended to 鈥渟upport orderly market functioning in the face of any short-term volatility鈥�.
He said: 鈥淲e expect institutions to draw on this funding if and when appropriate, just as we expect them to draw on their own resources as needed in order to provide credit, to support markets and to supply other financial services to the real economy.鈥�
Carney said: 鈥淭he bank will continue to consult and cooperate with all relevant domestic and international authorities to ensure that the UK financial system can absorb any stresses and can concentrate on serving the real economy.鈥�
鈥淭hat economy will adjust to new trading relationships that will be put in place over time.鈥�
He concluded: 鈥淚n the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward.鈥�
The UK, which has been a member of the EU since 1973, will leave the union after 52 percent of voters opted for a 鈥楤rexit鈥�.
Carney said in a statement that, although 鈥渟ome market and economic volatility can be expected as this process unfolds,鈥� the treasury and the Bank of England have a contingency plan for an exit vote are well prepared to take additional measures as the market adjusts.
Noting that there will be a period of uncertainty and adjustment following the result, he said: 鈥淚t will take some time for the UK to establish new relationships with Europe and the rest of the world.鈥�
鈥淪ome market and economic volatility can be expected as this process unfolds.鈥�
Carney went on to explain that the Bank of England has worked on strengthening the UK financial system.
He said: 鈥淭he capital requirements of our largest banks are now ten times higher than before the crisis.鈥�
鈥淭he Bank of England has stress tested them against scenarios more severe than the country currently faces.鈥�
UK banks have raised 拢130 billion of capital and have 拢600 billion of high quality liquid assets, Carney said, meaning they have 鈥渢he flexibility they need to continue to lend to UK businesses and households, even during challenging times鈥�.
The Bank of England has and additional 拢250 billion of additional funds to support the markets through its 鈥渘ormal facilities鈥�, and can provide liquidity in foreign currency, Carney said.
These preparations are intended to 鈥渟upport orderly market functioning in the face of any short-term volatility鈥�.
He said: 鈥淲e expect institutions to draw on this funding if and when appropriate, just as we expect them to draw on their own resources as needed in order to provide credit, to support markets and to supply other financial services to the real economy.鈥�
Carney said: 鈥淭he bank will continue to consult and cooperate with all relevant domestic and international authorities to ensure that the UK financial system can absorb any stresses and can concentrate on serving the real economy.鈥�
鈥淭hat economy will adjust to new trading relationships that will be put in place over time.鈥�
He concluded: 鈥淚n the future we will not hesitate to take any additional measures required to meet our responsibilities as the United Kingdom moves forward.鈥�
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