BOE Financial Policy Committee Minutes from 20 Sept meeting also out 3 Oct
- substantial risk of Brexit disruption to cross-border clearing activity
- the risk of disruption to wholesale UK banking services appeared to be slightly higher than previously thought, given that a number of EEA firms branching into the UK were not sufficiently focused on addressing this issue.
- the FPC judged that overall risks to UK financial stability from the domestic environment were broadly unchanged at a standard level. However, there were signs in some markets, globally and domestically, of excessive weight being placed on recent benign conditions as an indicator of future risks. This behaviour encouraged greater risk taking, potentially building up greater vulnerabilities.
- While there were pockets of risk domestically, most notably in the consumer credit sector, the balance of indicators monitored by the Committee were neither particularly elevated nor subdued when judged by historical standards.
- The FPC judged that it would be difficult for firms themselves to mitigate fully risks to the continued servicing of derivative contracts between UK and EU27 counterparties. In particular, after Brexit, firms may lose the permissions required to perform regular 'life cycle' events in these contracts, such as trade compression or exercising options. Tens of thousands of counterparties could be affected, representing around a quarter of both UK and EU client uncleared derivative contracts and notional value potentially totalling around £20 trillion.
Full Minutes here
GBPUSD 1.3249 with Brexit back to the top of the agenda aboard again and softening data.
Let's see how our services sector is coping in tomorrow's PMI release amid reports of many migrant workers heading back home.
