Brexit leaves CBA and Travel Money cardholders in the cold
Commonwealth Bank inconvenienced thousands of customers reliant on its Travel Money MasterCard on Friday evening by suspending the option of loading new funds in pounds sterling amid a drastic realignment in exchange rates in the wake of the UK plebiscite decision to leave the European Union.The suspension related to loading new funds denominated in sterling on the bank's Travel Money MasterCard but did not inhibit customers from spending funds (including in sterling) already allocated to a payment card.No-one from CBA was available to speak on the record over the weekend to explain the affair and the bank's outreach on Twitter and its website provided little insight.The suspension started some time on Friday evening, with Twitter lighting up with cranky messages from customers.By soon after midnight on Friday CBA advised customers that "all retail foreign exchange channels are operating as normal."It added: "The temporary suspension to retail foreign exchange transactions this evening was lifted as of midnight on Friday 24 June 2016. All retail foreign exchange channels including international money transfers, travel money card and foreign currency accounts are operating as normal."In the hours prior CBA repeatedly advised on Twitter that: "Due to recent results from the British exit referendum we are temporarily suspending all retail customer foreign exchange."If Twitter is any guide the bank's actions impeded customers from loading funds in some other currencies as well, even including US dollars, though CBA refutes this.Commonwealth Bank typically sets a rate late on Friday for most currencies in its retail foreign exchange channels that remains in place all weekend.While the outcome of the Brexit referendum may have surprised some CBA decision makers, the FX market response cannot have.In a blog post on Thursday, Commonwealth Bank's chief economist Michael Blythe and chief currency strategist Richard Grace discussed "the potential market implications of Brexit."They projected that "a vote to exit the EU is likely to trigger declines in global equity and commodity markets of a magnitude that would lead to a reassessment of global growth. "Blythe and Grace observed that, even then, "volatility in the GBP/USD exchange rate is as high as the 2008/09 global crisis. "For the AUD/GBP exchange rate it is as high as the 2010-2012 Eurozone crisis. Volatility will further spike on 23-24 June, with markets on edge once voting stations close."The negative impact on GBP and broader asset markets if the UK votes to exit the EU should far exceed the 'relief rally' that would follow a UK vote to remain in the EU."If the UK votes to leave the EU, we expect sharper moves in exchange rates than are currently priced," Blythe and Grace said at the time.