Bank of England has cautioned that Brexit effect will strain regulatory resources as it says that ability to monitor the financial sector will be edgy owing to the task of regulating the city.
Sam Woods the Deputy Governor of Bank of England has said that the Prudential Regulation Authority the regulatory arm of the bank faces concrete risk to its objectives. Promotion of financial stability is one among these and it will be affected owing to the Brexit effect after the UK quits the EU.
Woods who is also the Chief Executive of the Prudential Regulation Authority said that the agency will be additionally burdened even as it prepares to cope with the fallout of the Brexit effect. In a letter addressed to the Treasury Select committee Head Tory MP Nicky Morgan, he said that addressing the Brexit effect fallout was the top priority. Transitional exit deal with the EU was also supported by Woods that was initially proposed by Philip Hammond the chancellor, as quoted by the Guardian.
Woods elaborated that implementation period is favorable as it will give more time to the firms both in the EU and the UK. This will facilitate to adapt to the changed equation of the UK with the EU in an organized way, added Woods.
The Deputy Governor of Bank of England also highlighted the threats to the financial stability of the bank in the half-yearly assessment. In this, he cautioned that businesses being held in the City could disperse across financial centers accelerating costs for both the UK and the EU. The potential threats to the economy of the UK owing to disturbances in trade were also highlighted in the report.
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