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-BOE Carney: Extensive Contingency Plans In Place For Disruption       
     By David Robinson and Jai Lakhani                                                 
     LONDON (MNI) - Bank of England Governor Mark Carney in a letter to 
Chancellor of the Exchequer Philip Hammond outlined how the   Financial 
Policy Committee has strengthened banks' resilience and he said 
extensive planning was in place to keep sterling markets functioning 
through the most disorderly Brexit scenarios. 
     The minutes from the FPC's 20 and 27 November meetings were also 
published Wednesday. The following are key points from the letter and 
minutes. 
     -Carney said that in a disorderly Brexit market volatility was 
expected but he noted that after the June 2016 vote to leave the 
European Union sterling markets had continued to function and he 
expressed confidence that this would happen again. 
     The Bank alongside other authorities and financial companies "has 
put extensive contingency plans in place to support institutional 
resilience and market functioning during any period of heightened 
uncertainty," he said. 
     -Given the focus on preparations for Brexit, planned impact 
tolerance assessments for cyber disruption were put on hold until the 
first half of 2019. On the Committee's radar was the significant growth 
in the use of third party cloud service providers. The market is 
currently highly concentrated amongst a few providers and therefore 
disruption at one could impact the provision of services by several 
firms.   
     -Evidence supporting the resilience Governor Mark Carney speaks of 
is the fact that banks entered the 2018 stress test with an aggregate 
Tier 1 risk-weighted capital ratio of 17.7%, a striking 3.5 times higher 
than before the financial crisis. Under the 2018 stress test (which 
included a global China led recession), the risk-weighted capital ratio 
would still be at twice its level before the crisis. 
     -The minutes highlighted how the FPC had been co-ordinating work on 
the potential impact of Brext and the financial sector's resilience to 
it ever since the June 2016 referendum. 
     It was only when the Treasury Committee requested the Bank come up 
with Brexit scenario analysis, including for no deal, was the decision 
made to publish the detailed work. 
     The FPC also argued that as negotiations between the EU and UK had 
been completed in order to come up with a withdrawal agreement the 
analysis could no longer prejudice negotations, and there was no public 
interest case for keeping the Bank's work secret. 
-London newsroom: Tel+44 203 856 2226; email:                           
david.robinson@marketnews.com                                           
[TOPICS: M$$BE$,MT$$$$]                                                 

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