London: The world’s major central banks rushed yesterday to deal with financial markets chaos arising from Britain’s shock referendum decision to quit the European Union.
The news sparked a raft of announcements from the Bank of England (BoE), the Bank of Japan, the European Central Bank (ECB), the Swiss National Bank and the US Federal Reserve, as they clambered to curb dizzying global stock
market losses.
The announcements stemmed losses on major European markets like London, Frankfurt and Paris, but Madrid and Milan were still more than ten per cent down on jitters ahead of weekend Spanish
elections.
“The liquidity support promised by the Bank of England – and subsequently the ECB and Federal Reserve – appears to have been the main catalyst for the turnaround,” said Spreadex analyst Connor Campbell.
In reaction to chaotic trade, the BoE swiftly announced that it was ready to pump £250 billion ($370bn) to aid the smooth running of markets, declaring it will take “all necessary steps to meet its responsibilities for monetary and financial
stability”. The ECB separately said that it was on stand-by to open the liquidity floodgates
if needed.
Meanwhile, the Bank of Japan said it stood ready to work with other major central banks to inject ample liquidity to counter wild volatility in markets.
And the Federal Reserve added it was “prepared to provide dollar liquidity through its existing swap lines with central banks ... to address pressures in global funding markets, which could have adverse implications for the US
economy”.
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