EU has built up ‘strong’ defences to guard against Greek contagion

Uncertainty must be resolved to ensure economic stability in EU, says Mark Carney

Bank Of England governor Mark Carney: “Britain’s attitude to this developing crisis is clear: we hope for the best; but we prepare for the worst.” Photograph: Ben Stansall/WPA Pool/Getty Images

Bank Of England governor Mark Carney: “Britain’s attitude to this developing crisis is clear: we hope for the best; but we prepare for the worst.” Photograph: Ben Stansall/WPA Pool/Getty Images

 

The European Union has built up “quite strong” defences over the last few years to guard against the danger of contagion from the Greek crisis, the Governor of the Bank of England, Mark Carney has said.

“That time has been well spent. Most defences are quite strong,” said Mr Carney, who has led preparations in London, along with the Treasury, to prepare for the dangers that could be posed by a Greek exit from the euro single currency.

The European Central Bank has improved its preparations to cope with a major crisis, including the rules that it has put in place since the economic crisis began to deliver major assistance rapidly to struggling countries.

Britain’s direct exposure to Greece is “quite low”, since banks in London do not have significant shares of Greek debt, while Greek banks have a trifling presence in London: “It’s tiny relative to our economy,” said Mr Carney.

The Greek government’s “failure” to meet its IMF payments along with the expiration of its bailout “have served only to add to the developing crisis in that country”, the Canadian head of the Bank of England declared.

“It is vital now that the current uncertainty is resolved, whatever the Greek people decide, to ensure economic and financial stability across Europe, ” he said, following s conversations with chancellor of the exchequer George Osborne in recent days.

The Bank of England’s principal worry is not with Greece, but rather about the impact a full-scale crisis could have on “other peripheral euro economies”, where British banks continue to have a major exposure.

“Britain’s attitude to this developing crisis is clear: we hope for the best; but we prepare for the worst, and we stand ready to do whatever is necessary to protect our economic security at this uncertain time,” he said.