Bank of England: British financial institutions are capable of managing hard Brexit

Bank of England: British financial institutions are capable of managing hard Brexit

Next March Britain's financial institutions could deal with a tough Brexit if required. That’s what the Bank of England told on Wednesday, neglecting EU warnings that lenders aren’t prepared in the proper way.

The major bank’s Financial Policy Committee told that financial institutions of the United Kingdom have enough reserves and they won’t require more to withstand any turbulence in the financial markets if the UK abandons the European bloc next March without a deal.

The FPC keeps judging that the British banking system could have the real economy backed via a disorderly Brexit, as the FPC told in its statement.

The European Union's banking regulator told on Monday that UK financial institutions hadn’t managed to make substantial progress in their Brexit preparations and they shouldn’t actually expect assistance from mighty public intervention.

Additionally, the FPC told that capital levels at British banks were high enough that it would leave their counter cyclical capital buffer intact or CCYB at about 1%.

In March, the committee had told it would review in June whether the buffer should be increased because of other risks that arise over the course of a credit cycle.

On Wednesday, the FPC told that consumer credit keeps expanding quickly, although measures recently taken to stop overheating turned out to be effective, while financial institutions reported a considerable tightening of unsecured credit.

In addition to this, the FPC told that the United Kingdom has made decent progress in ensuring that outstanding derivatives contracts can’t pose a risk to the UK economy on the condition by next March there’s no Brexit transition deal in place.

Besides this, it told that the United Kingdom and the European Union require taking action. The European bloc has yet to reveal what steps it would take to avert probable disruption to about 29 trillion pounds of uncleared swaps contracts in case of a tough Brexit.

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