To prepare for a possible Brexit, banks have stepped up wargames in recent days, modelling for extreme pressure on their cash reserves. With the encouragement of regulators, some lenders, including HSBC, have even run modelling for the imposition of capital controls, according to people briefed on the exercise.
Banks said regulators had demanded a stress test that modelled for a 20 per cent fall in sterling. Traders said the volume of derivatives being used as protection against steep declines in currency and equities had not been seen since the peak of the eurozone crisis in 2011.
The cost of hedging against big moves in the pound — as measured by the one-week sterling volatility — rose to 43.86 on Wednesday afternoon London time.
The good news: should Leave win, "Britain will not be Greece"
Despite the heightened sense of alert, bank treasurers said they were confident their balance sheets were robust, given that capital and liquidity buffers were many times higher than in the last financial crisis.
Notably, even Europe seems to be admitting that "Plan B" did exist all along:
There were also signs some European leaders would be accommodating to the UK if it chose to leave. While Jean-Claude Juncker, the European Commission president, vowed there would be no further renegotiation with Brussels after a Leave vote, the head of Germany’s primary employers’ group said it would be “very, very foolish” to erect trade barriers with a Britain outside the EU.
Some senior financiers saw worrying echoes of the 2008 financial crisis. Lord Mervyn Davies, the former Standard Chartered chairman and Labour minister, said: “Everyone’s fearing a 2008 freeze of the wholesale markets. If that happens [the Bank of England] is going to have to step in as a buyer of all assets.”
So is this just more scaremongering, or a legitimate confirmation that all hell may break loose? All we know is that self-fulfilling prophecies have a nasty habit of becoming precisely that. Ultimately, the answer is in the hands of the British people.