BoE governor Mark Carney moves to reassure chaotic markets after Brexit
Mark Carney has moved to reassure Britain the Bank of England is “well prepared” to cope with financial shocks in the wake of the country’s historic vote to leave the EU.
The BoE governor said “some market and economic volatility” would be expected as the process of Britain’s exit from the bloc unfolds.
But he said the Bank had worked with the Treasury on “extensive contingency planning” to calm the financial sector in the event of Brexit, and stood ready to take additional measures if needed.
The London stock market plummeted by more than 8% after the result of the vote became clear, while the FTSE 100 index fell more than 500 points when it opened this morning.
Meanwhile the pound dropped 10% in value, its lowest level since the 1980s, while the Nikkei fell 8% and the value of gold rose 7%.
In a statement this morning Mr Carney said there would be a “period of uncertainty and adjustment following this result”.
But in a bid to reassure the public and calm the markets he added: “We are well prepared for this.
“The Treasury and the Bank of England have engaged in extensive contingency planning and the Chancellor and I have been in close contact, including through the night and this morning."
He explained that there would be no immediate change in freedoms to travel or in the sale and transportation of goods and services, and that the Bank had sought to ensure the financial system was “well-capitalised, liquid and strong”.
And he said the adjustments were bolstered by the capital requirements of the largest banks, which were ten times higher than before the 2008 financial crisis.
“The Bank will not hesitate to take additional measures as required as those markets adjust and the UK economy moves forward,” Mr Carney added.
He said the Bank stood ready to inject a further £250bn of additional funds into the economy to support the functioning of markets and was able to provide “substantial liquidity” in foreign currency if required.
Mr Carney said: “The best contribution of the Bank of England to this process is to continue to pursue relentlessly our responsibilities for monetary and financial stability. These are unchanged.”
Ahead of the referendum Mr Carney was heavily criticised by Leave campaigners after he warned the UK could enter into a recession if it voted for Brexit.
The magnitude of the move in the value of Sterling is unmatched by the single-day falls caused by the financial crash of 2009 or Black Wednesday in 1992.
Earlier last night, the pound was worth up to $1.50, as the markets anticipated a Remain vote.