The UK vote on June 23 to leave the EU ('Brexit') startled global financial players, putting pressure on leading central banks to stabilise markets and keep bank funding flowing. The Bank of England (BoE) announced that it was ready to provide an extra 250 billion pounds (341 billion dollars) to ease liquidity conditions while the ECB is also ready to deploy significant funds to avert a liquidity squeeze.
Market conditions will remain volatile, but there is little sign that markets are treating the vote as a systemic crisis.
Investor demand for safe-haven assets will spike; assets such as gold, the Swiss franc and the Japanese yen will appreciate.
The ECB's QE programme could help insulate euro-area peripheral government bonds from the spillover effects of Brexit.
Having been surprised by the UK referendum, markets will become more sensitive to political risk ahead of the US election.
