March 28, 2019 / 5:50 PM / a year ago

Exclusive: Markets underpricing 'no-deal' Brexit risk, ECB's Draghi told EU leaders

FILE PHOTO: ECB President Mario Draghi arrives at a European Union leaders summit in Brussels, Belgium March 22, 2019. Julien Warnand/Pool via REUTERS

BRUSSELS (Reuters) - Financial markets are not fully pricing in the risk of Britain’s exit from the European Union without a deal, European Central Bank head Mario Draghi told EU leaders last week, according to accounts of several senior officials in the bloc.

The officials reported Draghi as telling EU leaders last week that the ECB, the Bank of England and the European Commission had made all the necessary preparations for the “no-deal” scenario, expected to be highly disruptive.

But Draghi also said that private sector preparations were still incomplete and stressed that markets were underpricing the risks.

“He said that markets are underpricing the no-deal risk,” one euro zone official said.

Reporting By Gabriela Baczynska and Alastair Macdonald; writing by Jan Strupczewski

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