Top central bankers and finance ministers from the G7 issued a warning this week via conference call that Britain’s vote to quit the European Union (EU) could have ‘adverse implications’.
The pound dropped to a 31-year low after the UK voted to leave the EU, and sent equity markets into a tailspin.
Here’s more on that teleconference…
In a statement issued following the international conference call, the G7 stated: “We recognise that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability.
Adding: “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.”
Despite the uncertainty though, there is still confidence in the resilience of the UK’s economy and financial sector, confidence that was surely bolstered by the Bank of England’s announcement that it is ready to release £250 billion ($370 billion, €326 billion) to aid the smooth running of markets after Friday’s chaotic trade.
The European Central Bank also said it was on stand-by to open the liquidity floodgates if necessary, while the Bank of Japan pledged to work with other major central banks to inject ample liquidity to counter wild volatility in markets.
Although those markets appear to have settled a little and the pound has recovered slightly in the week following the historic vote, it’s safe to say the UK economy is still in a state of flux as there appears to be no real EU exit strategy in place.
It seems it’s anyone’s guess what will happen next.
What is the G7?
The Group of Seven (G7) is an informal collective of industrialised democracies that meet each year to discuss issues affecting international security, energy policies and global economic governance.
The G7 consists of:
- United Kingdom
- United States
The G7 was the G8 until 2014 when Russia was suspended following breaches of international law regarding the crisis in Ukraine.