U.S. regulators, including the Federal Reserve Board and Securities and Exchange Commission, were quick to respond Friday morning to the U.K.’s vote Thursday to exit the European Union by stating that they are carefully watching the global economic environment and are coordinating with other regulators accordingly.
The Fed released a statement saying that it is “carefully monitoring developments in global financial markets, in cooperation with other central banks,” adding that it is “prepared to provide dollar liquidity through its existing swap lines with central banks, as necessary, to address pressures in global funding markets, which could have adverse implications for the U.S. economy.”
Treasury Secretary Jack Lew noted in his statement that the people of the United Kingdom “have spoken and we respect their decision.” He stressed that “we continue to monitor developments in financial markets,” and that he’s been “in regular contact in recent weeks with my counterparts and financial market participants in the U.K., EU and globally and we are continuing to consult closely.”
Policymakers in the U.K. and elsewhere, Lew said, “have the tools necessary to support financial stability, which is key to economic growth,” adding that Treasury will “work closely with both London and Brussels and our international partners to ensure continued economic stability, security and prosperity in Europe and beyond.”
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The G7 Ministers and Governors issued a joint statement that they “respect the intention expressed today by the people of the United Kingdom to exit from the European Union” and that they are “monitoring market developments” and affirmed their assessment that “the UK economy and financial sector remain resilient and are confident that the UK authorities are well-positioned to address the consequences of the referendum outcome.”
The added that while they “recognize that excessive volatility and disorderly movements in exchange rates can have adverse implications for economic and financial stability” the G7 central banks “have taken steps to ensure adequate liquidity and to support the functioning of markets. We stand ready to use the established liquidity instruments to that end.”
The Dow Jones industrial average had dropped more than 500 points as of press time early Friday afternoon.
(Check out all of ThinkAdvisor’s news and analysis on Brexit.)
SEC Chairwoman Mary Jo White noted in her statement that the agency continues “to closely monitor the markets and have been in regular communication with financial institutions, exchanges and market utilities, as well as our financial regulatory counterparts.”