IIF Chief Warns “Brexit Bigger Threat To Global Economy Than Lehman”
- IIF Chief Warns “Brexit Bigger Threat To Global Economy Than Lehman”
by Tyler Durden, www.zerohedge.com
As Brexit appears to gathering pace among British voters, Bloomberg Briefs interviews Hung Tan, executive managing director at the Institute of International Finance in Washington, DC., to understand the global impact of a decision by Britain to leave The EU…
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Q: What would happen if Britain voted to leave the EU?
A: It is not Lehman in the short term in terms of markets being in a panic or chaotic mood, because the central banks will try to pacify that. But it is more significant than Lehman in its longer-term impact on global growth. Through trade and investment channels, there will be a downward impact on growth.
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Q: Isn’t it just a European issue?
A: It’s not just a vote for the U.K. exiting Europe, it is a symptom of the discontent and unhappiness of citizens with the status quo. They want change, but nobody can articulate what is it that they want. The impact in an exit vote of “leave” winning would be very far-reaching and impact long-term events. Near term there would be significant adjustment in financial markets.
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Q: How much could markets move?
A: The Bank of England, ECB and others have said they are prepared to supply a significant amount of liquidity just to calm the volatility. Over a week’s time [after the vote], I think it would reach some kind of lower equilibrium.
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