Bank of Eng­land’s Car­ney hits back at crit­ics of Brexit sce­nar­ios

Tehran Times - - ECONOMY -

Bank of Eng­land Gov­er­nor Mark Car­ney de­fended the cen­tral bank’s pro­jec­tions for the po­ten­tially ma­jor eco­nomic im­pact of Brexit which an­gered some law­mak­ers op­posed to Prime Min­is­ter Theresa May’s plans for leav­ing the Eu­ro­pean Union.

The BoE said last week that un­der a worst-case sce­nario, Bri­tain could suf­fer an even big­ger hit to its econ­omy than dur­ing the global fi­nan­cial cri­sis.

Car­ney told law­mak­ers on Tues­day that the sce­nar­ios set out by the BoE re­flected prepara­tory work to en­sure banks and other lenders were ready for Brexit, and were not off-the-cuff fore­casts.

“There’s no exam cri­sis. We didn’t just stay up all night and write a let­ter to the Trea­sury Com­mit­tee,” Car­ney told law­mak­ers at a hear­ing in par­lia­ment. “You asked for some­thing that we had, and we brought it, and we gave it to you.”

Pro-Brexit crit­ics of Car­ney, who have long ac­cused him of po­lit­i­cal med­dling, dis­missed last week’s re­port as scare-mon­ger­ing.

For­mer BoE Gov­er­nor Mervyn King joined the crit­i­cism on Tues­day when he lamented the cen­tral bank’s in­volve­ment in what he said was an at­tempt to scare the coun­try about Brexit.

“It sad­dens me to see the Bank of Eng­land un­nec­es­sar­ily drawn into this project,” King said in an ar­ti­cle pub­lished on Bloomberg.

Car­ney stressed the worst-case sce­nar­ios were “low-prob­a­bil­ity events in the con­text of Brexit” which the cen­tral bank needed to con­sider to make sure Bri­tain’s bank­ing sys­tem could with­stand any Brexit shocks.

“What you should take away from the worst-case Brexit sce­nar­ios is that the UK bank­ing sys­tem has the cap­i­tal, sep­a­rately de­tailed the liq­uid­ity, the over­all re­silience to with­stand that and be part of the so­lu­tion not the prob­lem,” he said.

Less than four months be­fore Brexit, it re­mains un­clear whether Bri­tain will leave the EU with a tran­si­tion deal to smooth the shock for the econ­omy.

May agreed a plan with EU lead­ers last month but it faces deep op­po­si­tion in par­lia­ment in­clud­ing from within May’s own Con­ser­va­tive Party. The plan faces a key vote on Dec. 11.

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