The European Central Bank has warned of "financial uneasiness in markets" should negotiations over the U.K.'s exit from the European Union fail to reach a solution.
Mario Draghi, ECB president, made the comments at a news conference announcing that the bank's governing council had kept key interest rates unchanged. He was responding to a question over the central bank's planning regarding Brexit.
"We are not party to the negotiations (between the U.K. and the European Union), so everything will depend on what is the final outcome," he said. "We are monitoring and working together with the Bank of England to identify potential risks of a sudden, hard Brexit event."
Mr. Draghi repeated previous comments he had made that "it would really take an extraordinary amount of lack of preparation to materialize the financial stability risks that may come from a hard Brexit. So by and large I'm still confident that a good, common-sense solution will be found where financial stability risks will be minimized."
However, Mr. Draghi also warned about another possibility. "If this lack of solution will continue and we approach the end date, the private sector itself will have to prepare on the assumption that there will be a hard Brexit. And that's where things may be — I wouldn't call it necessarily a big financial stability risk — but certainly uneasiness … so financial uneasiness in markets and intermediaries and (central counterparties) and member banks and so on," he said.
Interest rates were kept at zero for the main refinancing operations of the eurosystem; at 0.25% on the marginal lending facility; and -0.4% on the deposit facility. The ECB will also keep net purchases under its asset purchase program at €15 billion ($17.3 billion) per month until the end of the year.
Also Thursday, Norway's central bank, Norges Bank, said it kept its key policy rate unchanged at 0.75%.