But no signs of significant stress have yet emerged
by William Watts
If the U.K.’s decision to leave the European Union is going to hurt the U.S., it will likely come through the banking system rather than a direct hit on economic growth, Goldman Sachs warned Wednesday.
“Financial contagion is a greater source of risk given the high interconnectivity between the U.S. and U.K. financial systems. However, the post-financial crisis central banking and regulatory regime should limit concerns over the banking sector,” wrote Elad Pashtan, senior U.S. economist, in a note.
U.S. and European SXXP, +3.09% stocks tanked in the two days following last Thursday’s Brexit vote while the British pound GBPUSD, -0.2681% plummeted to a 31-year low versus the dollar. Banks were hit hard.