BOE Officials Held Special Meeting to Discuss Greece

        By Jason Douglas
        LONDON--Bank of England officials held a special meeting on June 29 to discuss the deteriorating situation in Greece and how it might affect the U.K.'s banks and wider economy, according to a record of officials' recent deliberations published Wednesday.
        The Financial Policy Committee, which safeguards financial stability, met as scheduled June 24 but met again June 29 after negotiations over a fresh bailout between Greece's leftwing government and the country's international creditors broke down, according to a record of the panel's meetings.
        The committee concluded at its second meeting that the outlook for financial stability had worsened. At the time, Greece's government had imposed controls on cash withdrawals after the European Central Bank froze its emergency funding support for the country's banks.
        The panel's concern underscores how the Greek crisis is rattling nerves even outside the 19 nations that use the euro. The BOE has said the U.K. banking sector's direct exposure to Greece is small but officials are worried the crisis could once again spread beyond the Mediterranean nation's borders and disrupt the European economy.
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        At the time of the meeting, Greece's Prime Minister Alexis Tsipras had also called a referendum in which he asked Greeks to reject the terms of creditors' latest bailout offer. That vote was held Sunday, and almost two-thirds of Greece gave their backing to the government's tough negotiating stance.
        "In light of developments over the weekend," the FPC minutes record for the meeting of June 29, "the committee judged that, though the outlook for financial stability had been broadly unchanged over most of the period since December, given the risks associated with Greece had begun to crystallize in recent days, the outlook had now worsened."
        Separately, the minutes of officials' scheduled meeting June 24 record that officials are increasingly concerned about the risks to Britain's domestic economy from the buy-to-let section of the housing market, where investors borrow money to purchase homes and then rent them out.
        The FPC asked BOE staff to examine whether the market poses a risk to stability and how any such risks can be mitigated, the minutes record. Buy-to-let loans account for some 15% of the overall stock of outstanding mortgages, the BOE said.
        (END) Dow Jones Newswires

        July 08, 2015 05:00 ET (09:00 GMT)

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