G-20 watch­dog says mar­kets coped well with UK Brexit vote af­ter­math

The Pak Banker - - FRONT PAGE -

LON­DON: The world's fi­nan­cial sys­tem coped well with mar­ket volatil­ity fol­low­ing Bri­tain's vote last month to leave the Euro­pean Union, the global Fi­nan­cial Sta­bil­ity Board said on Thurs­day. The FSB is chaired by Bank of Eng­land Gov­er­nor Mark Car­ney and co­or­di­nates fi­nan­cial reg­u­la­tion for the Group of 20 economies. At a meet­ing in China, the board looked at mar­ket volatil­ity fol­low­ing the United King­dom's vote to leave the Euro­pean Union, which sent ster­ling to its weak­est level in three decades. "Dur­ing this pe­riod, the global fi­nan­cial sys­tem has con­tin­ued to func­tion ef­fec­tively," the FSB said in a state­ment. "Au­thor­i­ties are mon­i­tor­ing mar­ket de­vel­op­ments and stand ready to ad­dress any fi­nan­cial sta­bil­ity is­sues, should they arise," it said. Some banks see mar­ket liq­uid­ity as stretched, mak­ing it harder for the fi­nan­cial sys­tem to ab­sorb shocks.

Banks have blamed tougher reg­u­la­tion for mak­ing it more ex­pen­sive for them to of­fer liq­uid­ity in mar­kets at all times but the FSB said it re­mains scep­ti­cal about this ar­gu­ment. "On bal­ance the ev­i­dence to date is that the re­forms have re­duced the like­li­hood that a de­te­ri­o­ra­tion in mar­ket liq­uid­ity could re­sult in wider fi­nan­cial sta­bil­ity prob­lems," it said. It still saw risks from de­fault­ing or non-per­form­ing loans and in­com­plete bank bal­ance sheet re­pair which should be ad­dressed - com­ments that will be widely seen as re­fer­ring to lenders in the euro zone.

The Euro­pean Cen­tral Bank will ex­am­ine on Thurs­day a plan by Monte dei Paschi BMPS.MI to sell bad loans, three sources close to the mat­ter said, as Italy's third-largest bank works to com­ply with a reg­u­la­tory re­quest to strengthen its bal­ance sheet. The im­pact of non-per­form­ing loans will be raised again when the re­sults of this year's EU stress test of top banks are re­vealed on July 29. The FSB meet­ing in Chengdu will up­date G20 fi­nance min­is­ters on progress in mak­ing the fi­nan­cial sys­tem safer since the 2007-09 cri­sis.

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