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EU referendum: What next for the world's central banks?

Economic policymakers must now decide whether and how they should respond to the UK's vote to leave the EU.

A Leave vote was always seen as more likely to generate significant disturbances in the financial world.
For that reason it is also the result which was thought more likely to pose a headache for the world's central banks.

There have already been statements from some that they are prepared to act to maintain financial stability.
There are two potential issues they might want to respond to in the short term: the stability of the (commercial) banks and swings in exchange rates.

With the banks there is a possibility of a general rise in risk aversion, and some might have difficulty borrowing in the inter-bank market. The ultimate danger from that is that they might be unable to make debt payments as they come due.

Central banks can address that by lending them extra money (liquidity). In the UK the Bank of England has already been doing this ahead of the referendum, hoping to ensure that there is sufficient liquidity already in place. The Bank has said it "will continue to monitor market conditions carefully and keep its operations under review".

Other central banks will be ready to take similar action if they think it's needed.

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