ZCZC
BCN-15
US-BREXIT-BRITAIN-ECONOMY-BANK
‘Disorderly’ Brexit could harm US economy: Fed’s Powell
WASHINGTON, Oct 17, 2018 (BSS/AFP) – A “disorderly” European Union exit by
Britain could have a negative knock-on effect on the American economy, the
chairman of the US Federal Reserve warned Tuesday.
The US banking system’s exposure to British banks is small but American
financial institutions’ exposure to the European banking system is “more
significant,” Jerome Powell said.
“A slowdown in the EU economy following Brexit could indirectly affect the
banks,” he said.
Powell’s remarks came the same day the EU’s chief Brexit negotiator Michel
Barnier called for more time to reach a deal, as fears grow that Britain
could crash out of the union with no agreement in place — a prospect
referred to as a “hard Brexit.”
Addressing a Washington meeting of the US Financial Stability Oversight
Council (FSOC), the Fed chief stressed that Britain’s planned pullout from
the EU was a “highly complicated process.”
“Uncertainties” about what it will mean for financial regulation made it
all the more important to reach “efficient solutions to avoid a financial
stability crisis,” he added.
The Treasury’s under secretary for international affairs, David Malpass,
raised similar concerns about Brexit’s impact on financial markets as he
addressed the FSOC, an advisory board of financial regulators created after
the 2008 crisis.
“We want to ensure that potential spillover particularly in the event of a
‘hard’ Brexit are mitigated so that financial stability is maintained,” he
said.
BSS/AFP/HR/0935