2016-07-25wsj.com

The U.K. decision to split from the 28-member bloc "surprised financial markets and was a negative shock to investor confidence," said Richard Berner, director of the Office of Financial Research, the research arm of the Financial Stability Oversight Council. He said the vote ushers in "months or years of uncertainty" over rules tied to the U.K.'s investment, financing and trade relations with Europe and the rest of the world.

Despite the ability of U.S. markets to recover from the initial shock of a market selloff, persistent concerns remain as the U.K. decides "if, how and when" to leave the EU, Mr. Berner said in a briefing with reporters. Possible spillover effects, he said, could jolt the broader financial system, including U.S. banks and nonbanks such as life insurers and broker-dealers.



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