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Greece

Bank of England deputy says Greek situation “very dangerous”, no contagion

According to the Bank of England financial services account for 8 percent of British national income

Greece’s deepening debt crisis has become “very dangerous” but there is no sign yet of it spreading to other countries on the periphery of the euro zone, Bank of England Deputy Governor Jon Cunliffe said on Thursday.

“We’re not seeing signs of that at the moment. Financial markets are not showing there is contagion or spreading of those risks to the periphery,” he said in a BBC radio interview.

Late on Wednesday, a defiant Prime Minister Alexis Tsipras urged Greeks to reject an international bailout deal, wrecking any prospect of repairing broken relations with European Union partners before a referendum on Sunday that may decide Greece’s future in Europe.

Earlier, BoE Governor Mark Carney had said that the BoE was ready to take whatever action was required to limit the spillover if Greece were to leave the euro zone.

“It’s a very volatile situation. It’s a very fluid situation. It is a very dangerous situation,” Cunliffe said.

He added that he hoped Greece and its creditors would be able to restart talks after the referendum, and find a way to avoid Greece leaving the euro zone.

“I very much hope that doesn’t happen. I think the Greek government, the Greek people have made clear that they want to stay in the euro, and Greece’s partners have made it clear that they want it to stay in the euro,” he said.

Separately, Cunliffe also said he believed that any decision by HSBC on whether to move its base outside of the Bank of England’s jurisdiction would be driven by business considerations, not a search for looser regulation.

Britain has significantly tightened rules on bank pay and capital requirements since the financial crisis, as well as imposing a special tax on banks’ global balance sheets.

HSBC has said it is reviewing whether to remain headquartered in London or to return to Asia.

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