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Bank of England says measures in place to tackle sterling flash crash

Staff Writer | October 13, 2016
The deputy governor of the Bank of England (BOE) told British lawmakers that the central bank had contingency plans in place in case there was another flash crash of sterling on the foreign exchange markets.
Sir Jon Cunliffe
Britain   A pound plan is in place
Last Friday, sterling fell to $1.15 to the pound from $1.26 during Asian trading, the largest move in the currency since June 24, the day after the Brexit vote. The crash lasted for about four minutes, with sterling recovering to $1.23 later in the day.

Deputy governor Sir Jon Cunliffe told lawmakers at the Houses of Parliament that "we saw last week news about how Brexit might play out. We've seen the effect on the currency markets... where sterling in Asian markets lost 6 percent of its value in a matter of minutes.

"We have seen that sort of crash before in U.S. Treasuries, in German Bunds. Some of it is not just to do with news about Brexit coming into the sterling price, but also to do with the way markets are currently configured."

Cunliffe, who holds special responsibility within the BOE for financial stability, added that the market recovered quickly and that he could imagine that "as more news comes in that there is potentially stress in markets. But I do take comfort from the resilience."

"We've done extensive contingency planning beforehand; much of that machinery, much of the preparations we put in place remain there," he added.