LONDON (MNI) – Bank of England Governor Mervyn King has warned
that although UK banks’ direct exposure to Greek debt is small,
uncertainty over which institutions in the global financial systems
hold significant amounts of Greek debt could lead to market volatility
and a crisis of confidence.
“The direct exposure to Greece of UK banks is really remarkably
small,” King said.
“At any given time there is always uncertainty about the scale of
exposures and which counterparty out there are heavily exposed,” he
added.
Speaking in a press conference following the publication of the
Financial Policy Committee’s Financial Stability Report, King also
warned that the ongoing euro-area sovereign debt crisis represents the
most immediate danger to the UK financial system.
“The most serious and immediate risk to the UK financial system
stems from the worsening sovereign debt crisis in several euro-area
countries. As the Report makes clear, direct UK bank exposures to those
economies are limited,” King said.
The BOE head also warned that the regulatory bodies “cannot hope to
prevent financial crises from happening.”
The report flagged the ongoing euro zone sovereign debt crisis as
the most immediate threat to the global financial system.
It also warned of the risks from a ‘snap back’ in bond yields from
their current low levels.
–London newsroom: 4420 7862 7491; email:
drobinson@marketnews.com/wwilkes@marketnews.com
[TOPICS: M$B$$$,M$$BE$,MT$$$$]
