Dr. Dombret, Deutsche Bundesbank: “Banks face immediate economic consequences”

In his keynote address at the Goethe University’s Center for Financial Studies on July 13, 2016, Dr. Andreas Dombret, Member of the Executive Board of the Deutsche Bundesbank (German National Bank), explained what the Brexit means for European banks. Although the conditions of the UK’s exit have yet to be negotiated, Dr. Dombret made three key conclusions:

  • Financial institutions have to prepare for a scenario in which euro-denominated trading and clearing is unlikely to have a future outside the EU.
  • Regarding the merger between Deutsche Börse and London Stock Exchange, the referendum outcome has even strengthened the economic rationale. But in order to reap the benefits, contracting partners should now invest in a well-balanced governance structure.
  • Financial actors in Europe have so far succeeded in digesting the somewhat surprising referendum result. Even ongoing volatility should not serve as an excuse to bypass the pillars of financial stability we have only just set up in the EU.

Additionally, Dr. Dombret lamented the loss of his British colleagues, explaining, “I –probably speaking for most, if not for all of my German colleagues – will greatly miss our British counterparts in European institutions; not at least because of their orientation towards stability and free market economy. But, fortunately, as central bankers, we will continue our collaboration at many other levels such as the G7, the G20, the IMF and the BIS.”

A full transcript of Dr. Dombret’s keynote address is available here.

Photo Credit: Deutsche Bundesbank / Frank Rumpenhorst