BoE to offer euros to banks in Britain to avoid cash crunch after Brexit

The Bank of England (BoE) announced it will offer more euros to banks in Britain to avoid any cash crunch after Brexit, Reuters reported.

The central bank also warned that other European Union countries are not fully ready for the possible no-deal hit to the financial system.

According to the BoE, most financial stability risks in Britain from a no-deal Brexit had been mitigated, and UK banks had enough liquidity to go for months without needing to tap markets.

But as a precaution it will launch a new weekly auction of euros from next week to ensure that banks based in Britain can borrow in euros, following on from a similar announcement last week about weekly sterling operations.

Potential problems for borrowers in the EU included higher interest rates on loans and customers in the bloc were not ready to do business with newly created units of banks and exchanges headquartered in Britain which have been set up in cities such as Frankfurt and Amsterdam in response to Brexit.

The ECB confirmed that the Eurosystem of central banks would stand ready to lend pound sterling to euro area banks if needed.