FRANKFURT, Germany – Concerns are rising that the eurozone could soon face damaging “new headwinds” following a vote by the British people to quit the European Union in July – a historic yet controversial move referred to as the Brexit.
The European Central Bank (ECB) said Britain’s vote to leave the EU had increased the downside risks for the 16-member economic bloc.
It added that investors are already acting more cautiously following the Brexit, warning that this has resulted in “a significant decline in government bond yields.”
“The uncertainty following the UK referendum was, in large part, of a political nature and due to the lack of clarity about the new relationship between the UK and rest of the EU,” ECB policymakers acknowledged in minutes from an ECB July meeting that were released on Thursday.
The ECB further warned that the ongoing confusion that Brexit had brought about among traders and investors means that no “undue expectations” of interventionist policies should ever be fostered.
The minutes indicate that the ECB considers it too soon to discuss such measures, as they want to wait until the extent of the economic disruption from the Brexit vote becomes clearer, emphasized Sputniknews in a report.
However, there is still little indication from the UK government on when that might be, the report added.
On June 23, some 52 percent (17.4 million) of British people voted to leave the EU after 43 years of membership.
The vote result caused political turmoil in Britain and sent economic shockwaves through the country as well as global financial markets.