Last week we heard that the European Central Bank had closed ranks with the Bank of England to avert the Brexit crunch. With the vote of the EU Referendum hanging in the wings, the European Central Bank has pledged to flood the financial system with euro liquidity if credit markets seize up after a Brexit vote.
The move came as European bank stocks plummeted last week across the board for another day, the epicentre of stress, as nerves fray over the potential fall-out from the British referendum.
“We have taken the necessary precautionary measures to meet liquidity needs,” said Ewald Nowotny, Austria’s central bank governor and an ECB board member. We have also assured that there will be no liquidity bottlenecks, either among English banks or European banks, if it becomes necessary,” he said.
The next 48 hours will reveal all.