Draghi Says Banks Can Protect Themselves Against No-Deal Brexit
(Bloomberg) -- The onus is on private-sector banks to take adequate steps to protect themselves against the worst effects of a no-deal Brexit in a timely fashion, according to Mario Draghi.
In a press conference in Frankfurt on Thursday, the European Central Bank president said if negotiations between the U.K. and European Union continue to signal a lack of agreement as the March deadline approaches, lenders will have to start preparing for a so-called hard Brexit.
While that may lead to some “financial uneasiness,” it would take “an extraordinary amount of lack of preparation” for a no-deal Brexit to trigger large financial-stability risks, Draghi said.
The comments come as the Bank of England ramps up pressure on the EU to help stave off the threat to trillions of pounds of derivative contracts and millions of insurance policies. U.K. officials including BOE Governor Mark Carney have criticized the EU for a lack of progress, while policy makers from the bloc have largely insisted that it’s up to the industry to prepare for the worst.
On Thursday, Draghi said the ECB was monitoring negotiations, and working with the BOE to “identify potential risks of a sudden hard-Brexit event.” He added that he remains “confident that a good, common-sense solution will be found where financial-stability risks will be minimized.”
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