Bank of England's Bailey Warns of Financial Risks from Geopolitical Tensions

Geopolitical Risks and Financial Stability

LONDON, Jan 20 (Reuters) - Bank of England Governor Andrew Bailey said on Tuesday that the level of geopolitical uncertainty and global trade tensions represented a big consideration for the central bank as it seeks to manage risks to the economy from the financial system.

Concerns Over U.S. Trade Policies

"I do think that geopolitical tensions and trade, particularly trade issues are an important part of that (rise in risks to financial stability last year)," Bailey told lawmakers on parliament's Treasury Committee.

Impact of Fed Independence

Asked about how concerned the BoE was about U.S. President Donald Trump's pursuit of Greenland and trade tensions, he said he did not want to say that specific issues could be a trigger for upheaval in the financial system.

"But the level of geopolitical uncertainty and the level of geopolitical issues is obviously a big consideration because they can have financial stability consequences," Bailey said.

He also reiterated his concern about the independence of the U.S. Federal Reserve whose chair Jay Powell was the subject of a Department of Justice subpoena earlier this month over a Fed building renovation project.

Bailey said there were substantial potential spillovers for Britain from any threat to Fed independence.

(Reporting by David Milliken, writing by Suban Abdulla; editing by William Schomberg)