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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/jul/05/mark-carney-to-outline-bank-of-englands-brexit-stability-moves-business-live

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Version 1 Version 2
Mark Carney eases bank lending rules to fight Brexit crisis as pound hits 31-year low - live updates Mark Carney eases bank lending rules to fight Brexit crisis as pound hits 31-year low - live updates
(35 minutes later)
11.53am BST
11:53
Government meeting with major banks about Brexit risks today
UK chancellor George Osborne has welcomed the BoE’s decision to ease bank capital rules.
Important move by @bankofengland using tools I gave them to reduce banks' capital requirements to boost lending capacity by up to £150bn
He also reveals that major bank bosses are heading to his offices this morning, to discuss the crisis
Meeting major banks in Downing Street shortly to discuss response to referendum result. We need great national effort to steer UK through
11.51am BST
11:51
The decision to cut the counter-cyclical capital buffers is one of several Brexit u-turns, tweets The Sun’s political editor:
So; banks' capital reserves to be spent, deficit to go back up, AAA credit rating lost. Six years of economics reversed in 12 days #Brexit
Hang on, though, didn’t The Sun back Brexit??!!
Updated
at 11.52am BST
11.48am BST
11:48
Structure of property investment funds may need to be reconsidered following Standard Life suspension says FCA head Andrew Bailey
11.43am BST
11:43
Some key points from Mark Carney’s briefing:
Carney quite rightly focussing on liquidity support to underline confidence. Correctly anticipating further pressure
Carney says 2014 stress tests shows banks are resilient: system is there for anyone who wants to buy a house
Carney advises consumers to be prudent post Brexit - just as he would if the UK was in the 10th year of a boom
#Carney: the law is the law, the rules are the rules, the system is the system. ie keep on keepin' on.
11.41am BST
11:41
Q: Does the Bank of England actually have the capacity to handle Britain’s exit from the EU?
Mark Carney insists that yes, the BoE has the staff capacity to cope once Article 50 is triggered.
But until that actually happens, the financial rules do not change.
11.39am BST
11:39
City watchdog in 'very close touch' with real estate firms
Q: How worried is the Bank about Standard Life’s decision to lock down its property fund last night? (to prevent investors bailing out)
Andrew Bailey, the next head of the FCA (the city watchdog), says Standard Life has taken a ‘sensible move’ to suspend redemptions.
It prevents a stampede of money out of property funds while the underlying assets are revalued (which can take time). It would be wrong for investors at the front of the queue to get their money back, while those at the back lose out, Bailey says.
The FCA is also in “very close touch” with firms in the sector, he reveals.
Related: Standard Life shuts property fund amid rush of Brexit withdrawals
11.36am BST
11:36
Q: How low could the Bank of England cut interest rates (they’re currently 0.5%)?
Carney declines to speculate much, as the Monetary Policy Committee is due to take a decision next week.
Any measure to stimulate the economy must be well-aimed and focus on the domestic economy.
We must also consider ‘unintended consequences’, he adds. [ultra-low interest rates make it hard for banks to achieve profitability, for example]
11.34am BST
11:34
Q: What impact will the slump in the pound have on the UK economy?
Mark Carney says that it should help with Britain’s current account deficit (reminder, it’s worryingly high)
Updated
at 11.34am BST
11.32am BST
11:32
Carney's message to Britain: Be prudent
Q: What is your advice to people who are wondering about taking out a loan or mortgage?
We are advising people to be prudent, governor Carney smiles.
If you are taking out a mortgage, at some stage, during the life of that mortgage, conditions will be difficult.
So you want to be sure, as a household or an individual, that you can repay that mortgage - you don’t want to lose your house or flat.
But this is classic central bank advice, he adds. We’d tell you to be prudent if we were in the 10th year of a boom.
11.29am BST
11:29
Carney says the Bank wants to avoid a repeat of the 2007-2008 conditions, when it was out of question to seek credit.
Banks can be part of the solution not the problem says Mark Carney as banks have more capital than they need
11.28am BST
11:28
Q: Do you regret allowing banks to pay dividends in the run-up to June’s referendum?
Mark Carney insists that UK banks are financially stable.
Q: How many UK households are vulnerable to an economic slowdown?
Carney flips this question to deputy governor Jon Cunliffe.
Cunliffe says the Bank are watching the ‘cohort’ of vulnerable households closely.
Households who are highly indebted tend to cut their consumption drastically, when hit by an interest rate shock or earnings shock, Cunliffe says.
But the Bank did restrict the availability of high loan-to-value mortgages in 2014, to limit the number of highly vulnerable households, he adds.
11.23am BST
11:23
Q: Is the Bank worried about a crash in the buy-to-let market?
Carney says the Bank is watching the buy-to-let sector carefully.
He points out that the bank included a housing crash in its latest Stress Tests -- and the current environment is not a serious as modelled in those tests.
The core of the UK financial system is very strong, and it will be there for home-buyers and businesses, he insists.
11.19am BST11.19am BST
11:1911:19
Carney: UK more risk averse after Brexit vote
Q: Is the Bank seeing signs of a slowdown in credit demand?Q: Is the Bank seeing signs of a slowdown in credit demand?
Carney says this is a crucial point -- the credit market will be driven by demand, not supply.Carney says this is a crucial point -- the credit market will be driven by demand, not supply.
We are seeing signs that the environment is becoming more ‘risk averse’, he says. And that’s why the Bank has decided to relax credit rules, to encourage banks to lend.We are seeing signs that the environment is becoming more ‘risk averse’, he says. And that’s why the Bank has decided to relax credit rules, to encourage banks to lend.
But demand for credit will be governed by the level of uncertainty over Britain’s future, and its relationship with the EU.But demand for credit will be governed by the level of uncertainty over Britain’s future, and its relationship with the EU.
UK is in a much more risk adverse environment says Carney
Updated
at 11.24am BST
11.17am BST11.17am BST
11:1711:17
Q: The Monetary Policy Committee warned that Britain might fall into recession after a Brexit vote, but might the fall in the pound actually be a stimulus?Q: The Monetary Policy Committee warned that Britain might fall into recession after a Brexit vote, but might the fall in the pound actually be a stimulus?
Carney replies that there is “growing evidence” that the economy was slowing, even before the referendum.Carney replies that there is “growing evidence” that the economy was slowing, even before the referendum.
And it is probably experiencing a “material slowing”, despite the foreign exchange moves.And it is probably experiencing a “material slowing”, despite the foreign exchange moves.
11.16am BST
11:16
11.15am BST
11:15
Onto questions
Q: The FTSE 100 has recovered its early post-Brexit falls and the pound has stabilised, so aren’t markets less stressed than feared?
Mark Carney replies that markets are functioning “pretty well”, although sterling volatility did hit a record high.
He says sterling has moved in the way that was “necessary” to allow the economic adjustment that is needed. [by which he means that a cheaper pound should help exporters and cut imports, in theory.....]
Governor Carney adds that the FTSE 250 index gives a sense of investor expectations on the direction of the economy.
[The FTSE 250, which contains smaller companies, has fallen much more than the FTSE 100, and is down 2.6% today]
11.11am BST
11:11
Mark Carney says there will be no immediate changes to UK financial regulations, until Britain has actually left the EU.
The law is the law, and the rules are the rules.
He is pledging to take whatever action is needed ensure monetary stability, and support the real economy.
But the Bank can only do so much.....
Carney: BOE "cannot fully offset the economic and market volatility." #Brexit
Mark Carney: 'we have a plan, we are putting the main parts in operation and it is working'
11.09am BST
11:09
Mark Carney confirms that the Bank of England has decided to cut the ‘counter-cyclical capital buffer’ on UK banks.
This means banks need to keep less capital on their books, and can pump up to £150bn more into the economy.
This will “immediately” give banks greater flexibility to lend to UK businesses and households, declares the BoE governor.
He adds:
Those businesses and households who want to seize viable opportunities in the post-Brexit world can be confident that they will be supported by the financial sector.
Carney also declares that regulators will make sure that banks don’t use this flexibility to boost bonus payments, or dividends.
11.06am BST
11:06
Mark Carney begins his press conference by reminding us that the Bank identified the referendum as the biggest threat to the UK economy.
That warning is now being borne out, the governor says, pointing to the plunge in the pound since June 23rd.
He singles out UK’s current account deficit (as mentioned a few minutes ago).
There is growing evidence that the referendum has delayed major investment decisions, Carney adds.
But on the upside, financial markets have responded well to the volatility after the referendum result, rather than adding to stress.
And banks are much better capitalised than before the Lehman crisis.
11.02am BST
11:02
Mark Carney's press conference begins
The Financial Stability Report press conference is beginning now. We’ve added a live feed to the top of this blog - you might need to refresh to see it.
Alternatively, It’s also being livestreamed here (right-click to open in a new tab).
10.56am BST
10:56
You can see the report yourself, here:
Financial Stability Report, July 2016
10.56am BST
10:56
More snap reaction:
Basic message from @bankofengland: financial system was facing growing problems before Brexit. They haven’t gone away & now we’ve got others
Bank of England post Brexit reality check: - sterling down 9%, £/$ most volatile since BW, UK banks lost 20% value pic.twitter.com/Djgpfivv3S
10.52am BST
10:52
The Bank of England is also concerned about the United Kingdom’s large current account deficit, following the Brexit vote.
This deficit, between what Britain imports and exports, is “high by historical and international standards”, says the Bank.
Indeed.... -->
The Bank is worried that the flow of capital into the UK could now slow, making this deficit even bigger....
The financing of the deficit is reliant on continuing material inflows of portfolio and foreign direct investment, which have been used to finance the public sector deficit and corporate investment, including in commercial real estate.
A sudden shift in the supply of foreign capital and in the current account deficit would be associated with a sharp increase in risk premia and adjustment in sterling.
The BoE also points out the pound suffered a record fall after the referendum vote:
.
10.45am BST
10:45
The Bank of England has also warned Britain’s banks not to splurge cash on payments to shareholders, or bonuses to staff:
Bank of England's FPC says banks should "not increase dividends and otherdistributions" - not that bonuses were going up in this climate.