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ECB says prepared for any Brexit outcome

Both the euro and pound have dipped in the lead-up to the vote, as analysts fear a Brexit would spark market panic.

Published: 21st June 2016 08:48 PM  |   Last Updated: 21st June 2016 08:48 PM   |  A+A-

European Central Ban_Mukh

President of European Central Bank Mario Draghi (File|AP)

By AFP

FRANKFURT: European Central Bank chief Mario Draghi said Tuesday the ECB is prepared for all eventualities regarding the British EU referendum later this week, but the economic impact of the vote is difficult to predict.

"It's very difficult to foresee the impact and the various dimensions in which the UK vote would impact on the markets and on economies of eurozone," Draghi told the EU Committee for Economic and Monetary Affairs in a regular hearing in Brussels, just two days before Britons go to the polls.

But "it's difficult to speculate about one outcome instead of another," Draghi said in a webcast of the hearing.

"We're trying to be ready to cope with all possible contingencies. It's very, very difficult to more precise than that," the ECB chief continued.

"We've done all preparation that is necessary now."

Leading central banks had held "extensive consultations" about the Brexit vote, Draghi said.

"We monitor basically all the relevant economic financial, legal and political developments, so that we can assess and manage the ensuable risks," he said.

"We want to be prepared for all possibilities. Mostly as far as we are concerned, it would be to be able to stabilize markets, to provide liquidity. We have existing swap lines with other central banks and we have basically existing liquidity arrangements, that have been there even before. So we make sure that they are usuable, active, and adequate."

Whatever the outcome, the referendum would have "both short-term and long-term effects," Draghi said.

Britons will vote on Thursday on whether to remain in or leave the EU, with polls showing the vote will be extremely close.

Both the euro and pound have dipped in the lead-up to the vote, as analysts fear a Brexit would spark market panic.

On the bond market, German 10-year bonds saw their yields drop below zero last week, a sign of a run on safe investments.

Financier George Soros warned of a Black Friday plunge in sterling if Britain votes to quit.

The Hungarian-born US billionaire, who made a fortune by betting against the pound in the so-called Black Wednesday of September 1992, said that a rejection of the European Union would deliver a major financial shock, with "serious consequences for ordinary people".

The ECB last week said that, if there is a Brexit vote, it will "use all instruments at its disposal" to maintain price stability.

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