Brexit: Central banks ready with tools for swift action

 The Bank for International Settlements (BIS) on Sunday said central banks are closely monitoring the situation and will work to ensure “orderly functioning” of financial markets.

BIS General Manager Jaime Caruana said extensive contingency plans by the private sector and central banks have been put in place to limit disturbances in the financial markets.

He emphasised that central banks have already communicated that they are closely monitoring the situation and stand ready to take necessary action to ensure orderly functioning of the market.

 

“Central banks have acted swiftly in the past, they stand ready to act again, and they have the tools,” he said in a statement. According to Caruana, stronger capital and liquidity buffers in the private sector have also made financial systems more resilient to such market disturbances.

On Saturday, central bankers, including Rajan, agreed to work closely to ensure stability in the financial markets. Global markets have been roiled by Brexit, sending stocks and currencies into a tizzy.

“Central banks will carefully monitor market functioning and stability, and cooperate closely,” Global Economy Meeting (GEM) Chairman Agustin Carstens had said. GEM took place on the occasion of the BIS annual general meeting here. 

Rajan, who is also Vice-Chairman of BIS, also participated in the meet. GEM comprises governors of 30 BIS member central banks in major advanced and emerging market economies, including from India.