Brexit is added
Negative supply and demand effects in a “no-deal Brexit”, that is, a chaotic future relationship with EU from the end of 2020, the Economic situation and complicate decisions even more, said the head of the central bank Mark Carney. However, the possibilities are not yet exhausted.
The Bank of England also announced a package of measures due to the virus crisis. For example, small companies are to be provided with an affordable financing instrument in the next twelve months.
“These measures will help keep companies and people at work and prevent a temporary interruption from causing long-term economic damage,” the reasoned. It also lowered the so-called domestic countercyclical capital buffer (CCyB) for banks from one to zero percent.
This buffer is intended to ensure that banks save additional capital in good economic times, for example to increase their resilience in the event of an economic downturn.
Banks are “part of the solution”
“In the financial crisis, banks were part of the problem, now they can be part of the solution,” explained Carney. They are intended to help companies overcome liquidity bottlenecks through increased lending.
Other central banks had previously eased their monetary policy, including the US Federal Reserve. The European Central Bank will decide on their course on Thursday.
Thomas Gitzel, the chief economist of the German VP Bank analyzed that “the Central banks jump in to help now. That is a good thing, since it shows willingness to act. However, monetary policy can currently only help to a limited extent. Companies, especially small and medium-sized companies, need access to liquidity. This has to come from the states. In Europe there is a relatively dense network of state development banks here. “
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