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Bank of England warns on Brexit

Tuesday, March 29, 2016 - 01:32

Britain's European Union referendum could push up credit checks and weaken sterling more, the Bank of England has warned. As Sonia Legg reports, it's also moved to bolster banks risk buffers and slow a boom in lending to landlords.

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The Lady of the Bank was designed to emphasise the global reach of the Bank of England. But some fear that could be under threat. The risks from a referendum on membership of the European Union are certainly having an impact. The central bank has no official position on whether Britain should remain in the EU. But it says the outlook for financial stability has worsened. The referendum could also push up borrowing costs and weaken the pound. (SOUNDBITE) (English) NAB, GLOBAL HEAD OF FX STRATEGY, NICK PARSONS, SAYING: "I am sure that the Bank of England is doing far more behind the scenes than it would ever admit publicly to - it would be astonishing if it were not so to do." Sterling has fallen to a seven year low against the dollar since the start of the year. And markets are pricing in more currency volatility as the June 23 poll approaches. In the meantime banks are being ordered to raise more capital. They'll have to hold what's called a counter-cyclical buffer of half a percent each by March next year - that's around five billion pounds across the industry. (SOUNDBITE) (English) NAB, GLOBAL HEAD OF FX STRATEGY, NICK PARSONS, SAYING: "The approach by the Bank of England and the FCA seems to have brought some stability into banking as a business and I think anything that improves that stability is to be welcomed." Some say the stability of the housing market also needs preserving. Buy-to-let lending has boomed in recent years on the back of low interest rates. And the BoE had a surprise for investors - ordering tighter credit checks on landlords to safeguard the 200 billion pounds invested in buy-to-let properties.

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Bank of England warns on Brexit

Tuesday, March 29, 2016 - 01:32