• Governing Council member sees cooler heads after overreaction
  • Signals ECB may renew push to move euro clearing from London

The European Central Bank is studying the implications of the U.K.’s decision to quit the European Union, although it’s too early to react right now, Governing Council member Ewald Nowotny said.

There was a “very strong reaction” in the market and an “overreaction on banks,” Nowotny, who heads the Austrian central bank, said in a Bloomberg Television interview in Sintra, Portugal. “We now see a period of cooler heads.”

Stocks, the pound and commodities all climbed on Tuesday for the first time since Britain’s shock vote to leave the EU, amid speculation policy makers will take steps to limit any economic fallout. U.S. and European shares as well as sterling rebounded after tumbling in the last two trading sessions, and a gauge of the dollar’s strength snapped its steepest rally since 2011.

Nowotny acknowledged that Brexit could take a heavy toll on the currency bloc’s fragile recovery.

“The main point is that we have nervousness in the market,” he said. “Insecurity is always bad for the economy.”

Asked whether a U.K. exit might prompt the ECB to renew its push to have clearing of euro trades moved out of London, he signaled that may be considered.

“It’s quite obvious that if there is a decision by the majority of British voters to leave the EU,” market institutions “will have to adjust to this,” he said.

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