The Relation of Brexit with the UK's QE Decisions and its Impact on the Eurozone

Abstract

This paper aims to provide some insights into the way that the recent referendum held on June 23rd about the Brexit could affect the UK's perspective to proceed to a new round of QE. Moreover, the effects of the latter on the Eurozone are under scrutiny. Transmission channels of the shock that the Brexit has brought about on the EU and the Eurozone, as well as possible scenarios about the future relationship between the UK and the EU are presented. To the best of our knowledge, this is the first academic piece of work that makes a direct link between the consequences of the Brexit on decisions about proceeding in further QE actions or not in the UK and at the same time studies how this could result in affecting the Eurozone's economy and its decision-making about adopting further unconventional policies. © Central Bank of Montenegro 2017.