Bank ensures safe banking during Brexit challenge

The National, Wednesday July 6th, 2016

The Bank of England took steps on Tuesday to ensure British banks keep lending in the “challenging” period that is likely to follow the country’s vote to leave the European Union.
The central bank said risks it had identified before the referendum were starting to materialize, including lower demand for commercial property.  Late on Monday, insurer Standard Life said it had halted withdrawals from its main British real estate fund.
The central bank also said it was closely monitoring investors’ willingness to fund Britain’s large current account deficit after the shock outcome of the vote, as well as high levels of household debt and the subdued global economy. “There is evidence that some risks have begun to crystallize. The current outlook for UK financial stability is challenging,” the BoE said after its Financial Policy Committee held two meetings after the June 23 referendum.
Sterling dropped more than 10 percent against the dollar and banks’ share prices fell by a fifth after Britons unexpectedly voted on June 24 to leave the EU, prompting Prime Minister David Cameron to say he would step down.
Sterling touched a new, 31-year low against the US dollar earlier on Thursday, hurt by Standard Life’s suspension of trading in its British real estate fund. Twenty and 30-year British government bond yields briefly touched new record lows of 1.473 per cent and 1.606 per cent after the BoE’s announcement.
Cameron’s ruling Conservative Party is now selecting a new leader, who will decide how soon and on what terms Britain will leave the EU after more than 40 years of membership.
– Reuters