Central bank governors to ensure market stability after Brexit

Central bank governors from across the globe are keeping a close eye on market developments following the Great Britain’s vote to leave the European Union.

The Bank for International Settlements (BIS) meeting held in Basel, Switzerland over the weekend saw governors discuss global financial developments and the likely ripple effects to global economies.

Central Bank of Kenya Governor; Dr Patrick Njoroge, who attended the meeting says there is need for market reassurance to ensure stability in the financial system.

“The meeting was dominated by discussions about the implications of the UK Referendum to leave the European Union, and the high volatility that was experienced in the global markets last Friday,” Dr Njoroge said in a statement.

Britain’s vote on Friday to leave the EU has sparked widespread turmoil and uncertainty, wiping more than $2 trillion of value from markets around the world.

Kenyan markets remained relatively stable on Friday as news of the vote trickled in. the shilling remained steady largely on assurance of CBK intervention should the local unit come under pressure. According to CBK data, there is sufficient build up of forex reserves which last week stood at $7.5 billion.

There’s extra cushion of the shilling with an emergency credit facility from the International Monetary Fund of $1.5 billion.

Dr Njoroge said central banks had promised to work closely to mitigate effects of the Brexit vote.

“They have pledged to cooperate closely and take necessary action to ensure the orderly functioning of the financial markets,” he said.

The governor reiterated readiness to intervene in the money and forex exchange market to ensure smooth operations.