LONDON (MNI) – The Bank of England’s Monetary Policy Committee will
sanction more quantitative easing if necessary in February, when the
current round of asset purchases ends, BOE Deputy Governor Charles Bean
said in BBC Radio Four interview.
In the interview, Bean highlighted the risks posed by the turmoil
in the euro area, but said one bright spot was real household income
growth in the UK should improve next year, allowing consumers to spend a
little more.
Asked about the possibility of a Eurozone break up, Bean said it
was cleary a possibility, but it would be highly problematic, and the
BOE stood ready to provide loans to domestic banks if they ran into
trouble.
“Countries may eventually feel that they are better off outside the
Eurozone than in it” but he added “It is not easy for a country to
leave, it is quite a disrputive thing if Greece, say, were to decide to
leave.”
He noted the risks posed by currency flight if any country leaves
the euro and said the BOE was doing contingency planning on a euro area
break-up.
“You would expect us to plan for the worst … If there are serious
storms coming from across the channel that we have to cope with there
are a number of things that we can do,” he said.
He said a Eurozone break up would impact the UK economy by hitting
exports “but the more important linkages are probably through the
banking system.”
While UK banks do not have high exposure to the Eurozone periphery
they do have high exposures to French and German banks.
In the event of a Eurozone break-up “We would provide temporary
loans to banks which are in difficulty. We have various facilities – we
introduced a new one just a couple of weeks ago as a precaution,” Bean
said.
–London bureau: +4420 7862 7491; email: drobinson@marketnews.com
[TOPICS: M$B$$$,M$$BE$]