Group of Seven warns of adverse implications from Brexit-linked volatility

By: | Published: June 24, 2016 8:11 PM

Finance ministers and top central bankers from the Group of Seven warned that Britain's vote to quit the European Union could...

G7 central banks have taken steps to ensure adequate liquidity and to support the functioning of markets. (Reuters)G7 central banks have taken steps to ensure adequate liquidity and to support the functioning of markets. (Reuters)

Finance ministers and top central bankers from the Group of Seven warned that Britain’s vote to quit the European Union could have “adverse implications”, after the pound dived to three-decade lows and equity markets flew into a tailspin.

“We recognise that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability,” the club of rich nations said in a statement.

Also Read- What Brexit could mean for the UK economy

“G7 central banks have taken steps to ensure adequate liquidity and to support the functioning of markets.

“We stand ready to use the established liquidity instruments to that end.”

It added that the United Kingdom’s “economy and financial sector remain resilient and (we) are confident that the UK authorities are well-positioned to address the consequences of the referendum outcome”.

Earlier today, the Bank of England announced it was ready to pump 250 billion pounds (USD 370 billion, 326 billion euros) to aid the smooth running of markets after today’s chaotic trade.

The European Central Bank also said it was on stand-by to open the liquidity floodgates if needed, while the Bank of Japan pledged to work with other major central banks to inject ample liquidity to counter wild volatility in markets.

The statement followed a conference call among officials from the G7 – the United States, Germany, Japan, Britain, Italy, France and Canada – to discuss today’s historic vote results.

The group has previously warned that a so-called “Brexit” could have disastrous economic consequences.

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