The Bank of England (BoE) took action on Friday to keep banks offering credit through 2021, as Britain grapples with the Covid-19 pandemic and prepares for any market disruption in the face of the big change in the business relationship. of the United Kingdom with the European Union.
Governor Andrew Bailey said that the central bank had done everything possible to mitigate the risks of exiting the European Union (EU), and that it was ready to deal with any disruption in financial markets.
“What does the Bank of England have in its arsenal, so to speak? The answer is a lot. We will use our tools, as we did in March, in case we are in that situation, ”Bailey said.
The central bank increased market liquidity auctions at the beginning of the pandemic and lowered interest rates to an all-time low and restarted its asset purchase program.
Market shocks would not threaten financial stability, but Bailey cautioned that some EU clients might not have access to UK financial services because the EU had not taken mitigation measures.
“There is a limit to what we can do,” Bailey said.
Market volatility could be reinforced because some derivatives users are not prepared to trade with EU counterparts or in EU-recognized trading centers, the BoE said.
“Financial institutions must continue to take steps to minimize shocks,” he added.
Prime Minister Boris Johnson said Thursday that there was a “strong possibility” that a post-Brexit transition period would end on December 31 without an agreement to avoid tariffs on British exports.
Bailey said he was confident that London would continue to be one of the world’s leading financial centers, and said job losses in the sector had been far less than some people had feared at the time of the Brexit referendum in the 2016.
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