What is the Bank of England preparing for the Brexit scenario?

(Baonghean.vn) - The Bank of England said it has prepared "all necessary steps" to ensure financial stability for the UK economy after the Brexit result.

World stock markets hit hard after Brexit. Photo: The Guardian

The Bank of England said it had extensive contingency plans in place and was working closely with the Treasury, domestic authorities and foreign central banks to ensure the UK's monetary and financial stability after the "shock".

In a speech after the referendum result, Mark Carney, governor of the Bank of England, said he expected some volatility following Britain's decision to leave the EU.

He reassured investors that: “The UK is well prepared for this “scenario”.

“The Treasury and the Bank of England have comprehensive contingency plans and plans in place to deal with the full range of developments in relation to the UK leaving the EU. The Bank of England is also prepared to provide £250 billion to support financial markets,” he said.

The vote sent the pound to its lowest level against the dollar in 31 years. British government bonds plunged to a new record low. Global financial markets were also volatile today.

Sterling fell to $1.33 - its lowest level since 1985. Meanwhile, the FTSE 100 Index, a futures index that opens at 8 a.m., was down 8%. Some analysts have questioned whether UK stocks will be able to open after volatile trading in Japan following the Brexit shock.

Analysts, including the Bank of England, have warned that the pound could fall by as much as 20% after the Brexit vote, a collapse similar to Black Wednesday in 1992, when Britain withdrew from the European Exchange Rate Mechanism and which also triggered the 2008 global financial crisis.

Mike Van Dulken of Accendo Markets said: “This shock will have the strongest impact on stocks in the financial sector - banking, insurance - followed by the real estate market, oil-related items”.

Dawn

(According to Independent)