LAKE FOREST, Ill.—One economist termed the U.K. vote to leave the European Union “a general uprising,” and outlined a number of issues credit unions should watch for as a result of the decision—including checking balances leaving the institution.
“This is a general uprising in Great Britain by the common citizen,” said Michael Moebs, economist and CEO of Moebs $ervices. “The average British citizen did not want their electronic tea pot regulated by some EU bureaucrat in Brussels or Berlin. Isn’t this what the followers of Bernie Sanders and Donald Trump are saying when they don’t want Washington to regulate what electric light bulbs they can use?”
Issues Moebs said CUs need to watch for as a result of the U.K. move:
- “The average American consumer has over $6,500 in checking. They have nowhere to put money or even earn a decent interest rate and the Brexit has only added to their uncertainty,” said Moebs. “Credit unions need to be very cautious about their checking accounts that have above-average balances. Doesn’t the member have the potential to move some or all of their money to a competitor?”
- Bond markets will be in turmoil for the summer, said Moebs. “Is this a time to take advantage of selling or purchasing any investments for the credit union and taking a profit or loss while cleaning up the balance sheet?”
- “Is the uncertainty in markets and exchange rates sufficient to keep interest rates unchanged?” said Moebs.
- “How many employer groups are tied to goods and services that are sold or purchased from Great Britain? These employer groups must watch the change of the pound’s value to the dollar,” said Moebs. “The change in value will have implications to the revenue and costs of these goods and services. It will also be important to track goods and services from Scotland, which may vote for independence again from Great Britain and stay in the EU.”
- “Are there any credit union members or employees who have students in Great Britain and may need financial support with the value of the pound falling?” said Moebs. “These may include: airfare costs, tuition, room and board expenses.”
- “Does any member need assistance with autos purchased (but not delivered) that were produced in Great Britain?” said Moebs.
- “Are any members scheduled for vacation tours or cruises to Great Britain who may need currency exchange assistance?”