Bank of England Preparing for Euro Collapse
May 30, 2012 • 8:56AM

Her Majesty's Bank of England is preparing for the collapse of the Eurozone. Robert Winnett of the Daily Telegraph reports that the Bank of England has drafted contingency plans for such a collapse, including possible cuts in interest rates and another round of quantitative easing. Winnett cites an unnamed senior official at the BOE saying that the bank is prepared to "again play their part in mitigating the impact" of Greece or other countries exiting from the Eurozone. The BOE has already completed £325 billion worth of QE and is ready for another round if necessary. This follows the meeting with Prime Minister David Cameron, BOE Governor Sir Melvyn King, Lord Turner of the Financial Services Authority, and the Chancellor of the Exchequer George Osborne. Other measures include asking banks to insure their holdings in Greece.

Ben Broadbent, of the BOE Monetary Policy Committee, said, "Were the still unlikely worst case risks in the euro area actually to be realized, then our own monetary policy would again play its part in mitigating the impact."