Carney warns against ‘weaponising’ fiscal assets

US sanctions may stop European firms from working with third-country parties

Bank of England Governor Mark Carney warned against “weaponising” assets in the global financial system as central bank chiefs fretted about the impact of a trade war.

Speaking in Bali yesterday, Carney stressed the need for investment flows to remain open, alluding to previous warnings that US protectionism affects the real economy through direct channels like reduced trade flows, disrupted supply chains and higher import costs.

The use of secondary sanctions in the US can effectively force European firms to stop doing business with thirdcountry parties. Earlier this year, ABLV Bank AS, one of Latvia’s biggest lenders, was shut down after US allegations of money laundering and violations of sanctions on North Korea. “From the UK’s perspective — as home to the second-largest asset management home — the commitment to openness, there’s no weaponisation of finance in the UK,” he told delegates.

Carney also gave rare praise to the Trump administration for cooperating with the financial system to deliver reform. “It’s worked actively with the system with respect to the evolution of financial reform in a way that is promoting the resilience of the system,” he said.

Earlier this year, ABLV Bank AS, one of Latvia’s biggest lenders, was shut down after US allegations of money laundering.