IMF Chief Says Policy Makers Must Move Quickly to Reduce Uncertainty
27 June 2016 - 11:00AM
Dow Jones News
International Monetary Fund Managing Director Christine Lagarde
Sunday warned of further market and economic pain if U.K. and
European policy makers don't quickly provide investors certainty
about the new state of their relationship in the wake of Britain's
decision to leave the European Union.
The extent of the economic and market fallout "will depend on
the level of certainty or uncertainty" officials can give as they
negotiate a new political, trade and economic relationship.
Ms. Lagarde, speaking at the Aspen Ideas Festival in Colorado,
said she has encouraged officials "to proceed in the most
efficient, productive way in order to reduce uncertainty."
Global markets sold off Friday as U.K. voters surprised
investors by deciding to leave the EU. The decision opens the door
to the first exit of a country from the union in its history. It
has fueled worries that other countries may follow, potentially
leading to the disintegration of the post-World War II European
project.
Ms. Lagarde said there will likely be more market volatility and
economic turmoil ahead.
The selloff, particularly the British pound, was a "violent,
brutal, immediate, massive move, but there was no panic," Ms.
Lagarde said.
That was partly because of the way policy makers responded, she
said. This market selloff isn't like the financial crisis, she
added.
"Central banks did their job, and put a lot of liquidity into
the market," the IMF chief said.
Investors are uncertain about the future direction of the
EU-U.K. negotiations and the subsequent impact on their
economies.
Policy makers "are holding the uncertainty in their hands," she
said.
It is unclear when the U.K. will formally start the exit
process, and EU officials are giving mixed signals about the timing
and nature of the process.
If the U.K. follows through and exits the EU, Ms. Lagarde said
there is "no doubt it will have an impact" on the U.K. and EU
economies.
Personally, the former French finance minister said the exit was
"a heartbreak for those of us who are truly European."
Write to Ian Talley at ian.talley@wsj.com
(END) Dow Jones Newswires
June 26, 2016 20:45 ET (00:45 GMT)
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