European Integration Is Dead, Long Live Monetary Cooperation

by Carmen Elena Dorobăț

The news of Britain’s decision in the EU referendum—and the subsequent resignation of David Cameron—created a wave of confusion and fear on financial markets. The pound sterling dropped to its lowest level since 1985, and the London stock market opened with a FTSE 100 lower by 8.9% compared to the day before. Debates were revived on what sectors of the British and European economy will be affected, what new policies must be designed to protect them, or how long and painful will the Brexit-driven recession be.

Amidst a sea of disagreements on all these points bound to keep debates alive for the time being, one policy decision was made that was not contested—nor is it likely to be—by either the winning or the losing side in Britain, or by any other administration around the world. As the Bank of England announced its decision “to provide more than 250 billion pounds ($347 billion) plus “substantial” foreign currency liquidity and… to take additional measures if needed”, no lively disagreements arose around the consequences of this decision, even as markets seemed to have quieted down after the initial shock.

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