REPORT
By Ovunc Kutlu & Gulbin Yildirim
Frankfurt Letter, week beginning June 27

-Unexpected Brexit decision shook Europe

Britain has voted to leave the European Union (EU) in its historic referendum. It was a 52 percent to 48 percent win for Brexit campaigners. The unexpected Brexit decision caused panic and great losses in Europe stocks and global markets.

Many leading EU countries showed immediate reaction to the Brexit decision. One of the most important being German Finance Minister Wolfgang Schaeuble who said in a written statement that there was a clear process for leaving the EU and this would now be applied.

"I had hoped for a different result. Now we must look forward and deal with this situation," he said.

The Munich-based Institute for Economic Research (Ifo) President Clemens Fuest also expressed his regret over the Brexit.

"The decision by British voters in favor of a Brexit marks the defeat of common sense," Fuest said on Friday.

-The European Central Bank (ECB)

After the Brexit decision, the ECB, the brain of the European economy, said the bank is ready to provide additional liquidity for financial markets if needed.

"Following the outcome of the U.K. referendum, the European Central Bank is closely monitoring financial markets and is in close contact with other central banks," it said in a statement.

The federal German court rejected legal challenges against the ECB. The court ruled that the ECB's 2012 bond-buying plan called Outright Monetary Transactions (OMT) complies with German law.

-The weak ahead

This week, the markets are looking forward to see the new possible process and new developments over the Brexit issue. Through upcoming reassurance from EU leaders, the markets are expected to calm down.

On the data side, flash estimate Euro area inflation will be released.

Additionally, the ECB Forum on Central Banking to be held in Portugal, will be on the top of the agenda of market participants.

 

 

 

 

 

 

 

 

 

27 Jun,2016

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