Lack of international risk management in BREXIT?
Paul Welfens ()
International Economics and Economic Policy, 2019, vol. 16, issue 1, No 9, 103-160
Abstract BREXIT is a historical step for the UK and the EU27 which could bring a strong Pound deprecation, an increase in risk premiums for British bonds and a transitory rise of financial market volatility plus a long-term reduction of economic growth in the UK; but also risks for the EU27. New BREXIT aspects are considered in an enhanced Branson model. Macroprudential supervision is a crucial policy challenge for EU28 in the context of BREXIT and the European Systemic Risk Board thus should have a critical role in 2019 and the following years. The ESRB should timely analyze the potential risk of BREXIT and consider adequate policy options to reduce or eliminate risks. Contract continuity as well as cooperation in prudential supervision between the EU27 and the UK stand for BREXIT-related problems that could create financial market stability – as is the BREXIT-induced UK deregulation pressure. EU prudential supervision post-BREXIT faces problems since a very large part of EU27 wholesale banking markets in the UK and thus not regulated by the EU after March 29, 2019. The EU Commission’s competence for EU trade policy as well as international investment treaties gives the EU the opportunity to offer the UK not only a – limited – Free Trade Agreement but an international investment treaty as well, including options for global cooperation. Several policy innovations are proposed which could help to limit risk associated with instability.
Keywords: Macroprudential supervision; BREXIT; EU; Financial risk; Economic policy; Instability (search for similar items in EconPapers)
JEL-codes: E5 E58 N14 G32 (search for similar items in EconPapers)
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4) Track citations by RSS feed
Downloads: (external link)
http://link.springer.com/10.1007/s10368-019-00433-6 Abstract (text/html)
Access to full text is restricted to subscribers.
Working Paper: Lack of International Risk Management in BREXIT? (2018)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:kap:iecepo:v:16:y:2019:i:1:d:10.1007_s10368-019-00433-6
Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10368/PS2
Access Statistics for this article
International Economics and Economic Policy is currently edited by Paul J.J. Welfens, Holger C. Wolf, Christian Pierdzioch and Christian Richter
More articles in International Economics and Economic Policy from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().