Carney Says No-Deal Brexit Threat to Markets Requires EU Action

(Bloomberg) -- Bank of England Governor Mark Carney said it’s time for the European Union to put its money where its mouth is when it comes to averting market turmoil in a no-deal Brexit.

While recent assurances from Brussels that the EU will do what’s necessary to prevent disruptions in financial markets are welcome, Carney said, “we need to move from comments to actual legal certainty.”

Carney Says No-Deal Brexit Threat to Markets Requires EU Action

U.K. regulators have been warning for more than a year about the threat that a cliff-edge Brexit poses to trillions of pounds of derivative contracts and millions of insurance policies. While the U.K. has announced steps to reduce the risks, including a plan to issue temporary licenses if needed, the EU long insisted that companies should be prepared for the worst.

EU regulators have begun to change their tune in the past few weeks. Most recently, the European Commission, the EU’s executive arm, vowed to remove one major source of concern by ensuring that the bloc’s financial firms don’t lose access to London’s clearinghouses even if political negotiations break down and Britain quits the bloc abruptly next March.

Carney said the Bank of England is “quietly confident” that U.K. financial firms are ready for Brexit. Banks have adequate capital and liquidity, and they have contingency plans in place, he said in London on Thursday. The “outstanding issues for the financial sector are largely related to cross-border issues,” he said. The BOE has emphasized the no-deal Brexit threats to derivatives contracts, insurance policies and data sharing.

©2018 Bloomberg L.P.