Tuesday 14 June 2016 3:41 pm
European Central Bank to do “whatever it takes” to limit turmoil following Brexit vote
Europe's top central bankers are ready to announce they will do "whatever it takes" to contain the spillover of Brexit on the financial markets. The European Central Bank (ECB) is reportedly preparing to make a high-profile pledge on 24 June in the event that the UK votes to leave the EU to provide as much assistance as possible to the market and limit turmoil.
According to Reuters, the ECB will work with the Bank of England to extend "unlimited funding" in both sterling and euros to European banks to make sure they have the liquidity they need and best fight off the prospect of wild swings on the money markets. Similar mechanisms were put in place with the US Federal Reserve following the 9/11 terrorist attacks.
A conference call among the 19 individual central banks that make up the ECB has been scheduled for the early hours of 24 June, once indications of the referendum result emerge, to decide on the exact course of action.
Read more: FTSE 100 crashes to three-month low
Carney has previously hinted that the Bank of England will also step in to limit the fallout of a Brexit vote. The governor said he could call an emergency meeting of the rate-setting monetary policy committee (MPC) whenever it was necessary if he wanted to change tact at short notice. He has also said swap lines with the ECB would be kept under review and plans to take any necessary decisions shortly after the result of the vote emerges.
The news comes after another day of turmoil on the financial markets, with sterling tumbling against the dollar and the FTSE 100 crashing through the 6,000 mark.
However, there was relatively muted take-up of the first of the Bank's additional repurchase agreement (Repo) auctions held this morning. Lenders tapped up Threadneedle Street for an additional £2.5bn in cash in the first of three extra funding rounds timed around the referendum – that was the lowest in a single round since February though it did take the amount of assets swapped with the Bank for cash to its highest ever in a single month.
A spokesperson from the ECB was unavailable to comment.