Bank of England Research Warns Banks Still Vulnerable

Britain’s financial sector remains vulnerable to further global shocks and the Bank of England must be ready to rescue banks that run short of funds, Threadneedle Street warned on Thursday.

Without a permanent emergency lending facility to support the banking sector, the UK could suffer another Northern Rock-style collapse, it said.

The report’s findings follow research that shows the UK’s economy is one of the most open in the world, and that the drop in output after Lehman Brothers went bust was mostly due to “global influences”. The research also found that around two thirds of the weakness in the level of UK output since 2007 can be attributed to “world shocks”.

It said: “The UK economy is closely integrated with the rest of the world through the trade of goods and services, and the exchange of financial assets. This interconnectedness means that the UK economic environment is shaped, in part, by events in the wider global economy. These events can be external to the United Kingdom, or common to many economies, including the United Kingdom.”

via The Guardian

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza