A "disorderly" European Union exit by Britain could have a negative knock-on effect on the American economy, the chairman of the US Federal Reserve warned Tuesday.
The US banking system's exposure to British banks is small but American financial institutions' exposure to the European banking system is "more significant," Jerome Powell said.
"A slowdown in the EU economy following Brexit could indirectly affect the banks," he said.
Powell's remarks came the same day the EU's chief Brexit negotiator Michel Barnier called for more time to reach a deal, as fears grow that Britain could crash out of the union with no agreement in place -- a prospect referred to as a "hard Brexit."
Addressing a Washington meeting of the US Financial Stability Oversight Council (FSOC), the Fed chief stressed that Britain's planned pullout from the EU was a "highly complicated process."
"Uncertainties" about what it will mean for financial regulation made it all the more important to reach "efficient solutions to avoid a financial stability crisis," he added.
The Treasury's under secretary for international affairs, David Malpass, raised similar concerns about Brexit's impact on financial markets as he addressed the FSOC, an advisory board of financial regulators created after the 2008 crisis.
"We want to ensure that potential spillover particularly in the event of a 'hard' Brexit are mitigated so that financial stability is maintained," he said.
A “disorderly” European Union exit by Britain could have a negative knock-on effect on the American economy, the chairman of the US Federal Reserve warned Tuesday.
The US banking system’s exposure to British banks is small but American financial institutions’ exposure to the European banking system is “more significant,” Jerome Powell said.
“A slowdown in the EU economy following Brexit could indirectly affect the banks,” he said.
Powell’s remarks came the same day the EU’s chief Brexit negotiator Michel Barnier called for more time to reach a deal, as fears grow that Britain could crash out of the union with no agreement in place — a prospect referred to as a “hard Brexit.”
Addressing a Washington meeting of the US Financial Stability Oversight Council (FSOC), the Fed chief stressed that Britain’s planned pullout from the EU was a “highly complicated process.”
“Uncertainties” about what it will mean for financial regulation made it all the more important to reach “efficient solutions to avoid a financial stability crisis,” he added.
The Treasury’s under secretary for international affairs, David Malpass, raised similar concerns about Brexit’s impact on financial markets as he addressed the FSOC, an advisory board of financial regulators created after the 2008 crisis.
“We want to ensure that potential spillover particularly in the event of a ‘hard’ Brexit are mitigated so that financial stability is maintained,” he said.
