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Central banks ready to defeat markets if Britain chooses independence
Global Central Banks Sound Brexit Alarm as 'Leave' Jitters Grow
By Jeff Black and Matthew Campbell
Thursday, June 16, 2016
Global central banks sounded the alarm over the risks posed by a British departure from the European Union, as polls continued to show the “Leave” campaign ahead with a week to go before the June 23 referendum.
In a 15-hour relay of comments, the chiefs of the U.S. Federal Reserve the Bank of Japan, the Bank of Canada, and the Swiss National Bank all cited the referendum on EU membership as being potentially disruptive to the global economy. The BOJ said central banks are in contact over a so-called Brexit, and the Bank of England repeated its warning on the risks in its final monetary-policy decision before the vote.
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We are "closely exchanging opinions with the Bank of England and other central banks," BOJ Governor Haruhiko Kuroda told reporters in Tokyo on Thursday, adding that his institution can respond to any potential surge in dollar-funding costs. "We want to coordinate closely with domestic and overseas authorities and carefully watch how the vote will affect the international financial market and the global economy, including Japan."
With almost all recent polls showing "Leave" in the lead, investors are focused on how financial guardians at the Fed, European Central Bank, and BOJ can stem market panic if the U.K. takes such a step. Officials stress that liquidity facilities left over from the crisis era are available, and central bankers in countries like Switzerland and Denmark say they’re ready to act to stabilize their currencies.
It is "possible that we'll have turbulences" in reaction to a Brexit, SNB President Thomas Jordan said in a Bloomberg Television interview in Bern. "We have a very good exchange among all major central banks so that the information is here, so that we understand the developments in the market."
In the first instance, officials could act in global markets to prevent any "exaggerations," Jordan said. ECB Governing Council member Ewald Nowotny said in Vienna on Thursday that swap agreements between central banks will ensure lenders have access to liquidity during any "disturbances on the market."
"We'd expect major central banks to intervene to push back against this volatility," Steven Barrow, a strategist at Standard Bank Group Ltd. in London, said in a note to clients. "Policy makers will feel they already have the tools in place to try to limit wider disruption." ...
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