The Financial Plan for “Brexit”? Cross Your Fingers

The financial industry is unnerved by polls before the June 23 referendum in Britain on sticking with or leaving the European Union suggesting momentum favors exit. “Like local responders readying sandbags as a hurricane menaces their shores, financial industry overseers have been quietly drawing up contingency plans while surveying the expensive havoc a so-called Brexit is already wreaking,” reports Peter S. Goodman. “Central bankers from London to Washington have been monitoring the tempest while making preparations to unleash credit should markets seize with fear.” No one knows how a complex transition may unfold, guided by political leaders and policymakers, and whether the break might inspire other separatist movements. Investors will review assets; banks are stocking up on cash, and central banks will prepare to lend. Brexit, if approved, may reduce the value of British stocks and pound. Financial firms prepare legal teams to sort out a mess. If voters approve exit, Britain will remain a member for two years, but can’t expect special favors from the European Union. – YaleGlobal