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“As the timeline for action gets shorter, the need to address potential financial and economic disruption increases,” David Malpass, Treasury undersecretary for international affairs, told a meeting Tuesday of the Financial Stability Oversight Council. “We want to ensure that potential spillovers particularly in the event of a hard Brexit are mitigated so that financial stability is maintained.”
Federal Reserve Chairman Jerome Powell echoed Malpass’s concern at the regularly scheduled FSOC meeting in Washington. The panel is comprised of the heads of all U.S. financial regulators. Both officials emphasized the uncertainty surrounding the negotiations between the EU and the U.K. Brexit talks are currently deadlocked.
Malpass said the Treasury Department was maintaining close communication with U.K. and EU counterparts about the risks associated with a so-called “hard” exit, meaning the U.K. would leave Europe’s single market and customs union. Malpass said that Treasury will “closely monitor” developments in Europe with the hope that the parties can negotiate an “orderly” Brexit with a transition period to mitigate risks. [...]