BoE noted in the Financial Policy Summary that the core of the financial system is prepared for wide range of risks it could face. And it could withstand even “a worst case disorderly Brexit”. In such case, there will be a “sudden imposition of trade barriers with the EU; loss of existing trade agreements with other countries; severe customs disruption; a sharp increase in the risk premium on UK assets; and negative spillovers to wider UK financial markets.”
But, major UK banks’ capital ratios are more than three times higher than before the global financial crisis. Thus, these banks have “large buffers of capital” to absorb losses. The capital is even sufficient to withstand severe global stresses happening at the same time of worst case disorderly Brexit.
