ECB's Coeure: Urgent to clarify timeframe, terms of Brexit

July 1, 2016 09:40 AM

It is urgent to clarify when and how Britain's exit from the EU will take place to limit its impact, senior ECB official Benoit Coeure said on Friday, adding it was hard to quantify what the Brexit "uncertainty shock" would cost the euro zone economy.

Central banks are closely monitoring the impact on markets of Britain's decision to leave the European Union and stand ready to intervene if financial stability is threatened, Benoit Coeure, an ECB Executive Council member, told Le Monde daily.

That could take the form of liquidity injection in euros or other currencies, he said, while adding that markets had continued to function normally so far despite huge adjustments.

"What is urgent today is to clarify the calendar and method because a prolonged uncertainty would have an economic cost, first of all for Britain but also for the European Union," Coeure told Le Monde.

A healthy pickup in growth in the euro zone, constrained by unemployment and high debt levels, "will inevitably suffer from the 'uncertainty shock' that is created by the British referendum," he said.

Britain's decision to leave the bloc does not put the EU construction project at risk but steps must be taken to protect the euro currency, Coeure was also quoted as saying.

"The euro is a reality but it must be protected. This requires moving towards more integration in financial and budget matters, around joint euro zone institutions that will be accountable to citizens," he said.

"Experience from the crisis has convinced me that an intergovernmental Europe, where budgetary and financial decisions would be taken only by governments, would condemn the euro to lasting fragility," he said. 

But first of all, EU leaders must start by reconciling citizens with the EU with projects on growth and jobs, he added.



About the Author