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Bank of England asks financial institutions to develop an action plan for Brexit

The Bank of England has asked British banks, insurance and other financial institutions to develop contingency plans for the period of the UK's withdrawal from the EU.

British Prime Minister Teresa May plans to launch the Brexit procedure, to use the Article 50 of the Lisbon Treaty in two days, so organizations should convince the regulator that they are ready for a "range of possible outcomes".

The Brexit stress test should show how banks will be able to withstand the pound's fall by 32% against the dollar, as well as rising inflation to 5% and raising interest rates to 4% by 2018. The Bank of England will also check what will happen to the banks if the scenario of a deep recession in the global economy is realized, with the possible collapse of Chinese credit markets.

Seven British lending institutions - Barclays, HSBC, Lloyds Banking Group, Nationwide, RBS, Santander and Standard Chartered - are included in stress tests.

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