IMF job? Ask me later, says Bank of England's Carney

Marco Green
July 12, 2019

Facebook's proposed Libra digital coin must show it is "rock solid" before it can be allowed to launch, Bank of England Governor Mark Carney said on Thursday.

The perceived likelihood of a no-deal Brexit has increased since the start of 2019. Carney told a news conference.

The BoE's latest report said that "in a disorderly Brexit, a range of United Kingdom asset prices - including the sterling exchange rate, equities, corporate and government debt and bank funding costs - would be expected to adjust sharply, tightening financial conditions for United Kingdom households and businesses".

"UK can run a large current account deficit for a considerable period of time". But it said British banks are strong enough to withstand an abrupt and messy split with the European Union, as well as a global trade war. "Overall, the stress scenario was more severe than the global financial crisis".

Markets are not expecting BOE Chief to shed any light on the monetary policy outlook, as he nay make some comments on financial system risks and possibly macroprudential policies, in light of the FSR.

Last month Facebook drew worldwide interest when it announced plans to establish its own payment system, backed up by a currency it calls Libra.

Carney, who joins a growing chorus of central bankers unsettled by the project, said many issues needed addressing first, such as anti-money laundering and terrorist financing controls, and managing and safekeeping the assets underpinning Libra.

Banks' ability to withstand liquidity shocks would also be put under the microscope later this year, the BoE said, though it added that it did not intend to tighten liquidity rules. However, there are many more far-reaching consequences than just these as whatever decision is taken by the incoming Prime Minister regarding Brexit will have an huge effect on the British economy even though billions of pounds have already been spent.

The Bank did concede, however, that are still "material risks" of disruption to the economy in the event of disorderly withdrawal from the EU.

This follows the suspension in June of a fund from Neil Woodford, one of Britain's best known money managers, after it was unable to meet demands from clients wanting to pull out their money.

Other reports by Click Lancashire

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