(Bloomberg) -- The Bank of England's efforts to ensure financial stability in the case of a no-deal Brexit won't prevent market volatility, according to policy maker Jon Cunliffe.
A disorderly Brexit is the biggest risk facing the U.K. financial system, and would likely lead to a correction in British assets and losses for banks, Cunliffe, the BOE's Deputy Governor for Financial Stability, said in a speech in London Wednesday.
While the central bank has taken steps to ensure that “the system is resilient to a worst-case major economic shock from Brexit, that does not mean losses would be avoided, or that it would be without volatility,” Cunliffe said.
“Financial stability does not mean market stability,” he added.
Cunliffe was speaking the day after the BOE announced it was putting in place more buffers for the banking system as the prospect of a messy Brexit continues to hit companies and consumers. The U.K. is currently due to leave the European Union -- with or without an exit deal -- at the end of this month.
He also noted that the overall level of U.K. debt is high by historical standards, but the buildup hasn't been very rapid. The Financial Policy Committee has already responded to some signs of increased risk appetite among banks, and the growth rate of consumer lending has subsequently fallen.
--With assistance from Lucy Meakin.
To contact the reporter on this story: David Goodman in London at dgoodman28@bloomberg.net
To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, Andrew Atkinson
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