According to Bank of England’s policymaker, Neil Woodford’s suspension of his equity fund could become a “very big problem” should investors trust become undermined within the financial system.
Anil Kashyap, an external member of the Bank’s Financial Policy Committee (FPC) told the Treasury Select Committee MPs the Woodford saga is being watched very closely for signs of “spill over” with the wider system.
Kashyap said, “I don’t think Woodford per se creates financial stability risks, but if it undermines confidence in the system it could be a very big problem.
“It’s a very visible thing and has got people worrying about whether or not it is going to be present elsewhere.
He added, “We’re going to keep watching it and if it ever gets to the point where there’s substantial assets in a vehicle like that, that could give rise to widespread spillovers, we’d have to do something about it.”