Central Bank chief warns Brexit will lead to more currency volatility
The Governor of the Central Bank, Philip Lane, has warned of further volatility in financial and currency markets in the wake of last June's Brexit poll.
Yesterday Governor Lane called for "urgent" progress on the harmonisation of Europe's Capital Markets Union as reliance on London as a location for euro-denominated capital markets activity weakens in the wake of Brexit.
Mr Lane was speaking at the Euro50 Group and Center for International Governance (CIGI) Breakfast meeting in Washington DC.
Mr Lane, who said that the increase in capital ratios for European banks in recent years had helped ensure an "orderly market response" to Brexit, also said the substantial decline in Sterling since the poll provides "an important stabilizing mechanism" by which the adverse implications of Brexit for the UK's terms of trade are mapped into international relative price adjustment.
"It is important to put the recent movement in the Sterling-euro exchange rate into context," Mr Lane told delegates, which included Paul Tucker, former Deputy Governor of the Bank of England and Domenico Siniscalco, the former Minister of Economy and Finance in Italy.
"It partly just unwinds the sustained appreciation of Sterling that took place between early 2013 and early 2015."
The Central Bank of Ireland has recently adjusted its 2017 growth forecast from 4.2pc to 3.6pc and has warned of further downside risk as a result of Brexit.
Dublin, along with cities such as Frankfurt and Paris, have been mooted as potential beneficiaries of Brexit should financial services firms seek to relocate to secure passporting rights, allowing them to operate across the European Union.
Passporting rights are tied to the single market and would automatically cease to apply if UK is no longer at least part of the European Economic Area.
However, Governor Lane cautioned British financial firms planning to moving from the UK to European countries, that any moves should not be driven by regulation alone owing to the fact that all euro-area banking operations are regulated directly by the ECB.
Last Friday, protests were held in a number of border areas to demonstrate against the Brexit vote.
On the Derry/Donegal border, people gathered behind an old customs building and highlighted the fears of the community over the prospect of a physical border being re-established
Northern Ireland, along with Scotland, voted to remain in the European Union, however England and Wales voted to leave.
John McGowan, chief executive of Enterprise North West, a border business park, said the region's economy would be destroyed by Brexit.