He told the Treasury Select Committee: “There are greater financial stability risks on the continent in the short-term, for the transitions, than there are for the UK.”
Mr Carney added: “In the run-up to the referendum we felt that it was the largest risk… The scale of the immediate risks around Brexit have gone down.”
The chief added: “The risk analysis we made around Brexit was correct.”
Mr Carney sald actions by the Bank had helped the economy’s stellar performance following the referendum.
He told MPs: “I do think we helped make the weather.”
But the chief repeated warnings that there would be a slowdown In Britain’s economy this year, thanks to the vote to leave.
As part of exiting the custom union, the Governor said it’s “highly advisable” that there is a transition phase agreed early on – or there could be risks to Britain’s financial stability.
Mr Carney said HSBC chairman Dougals Flint had used a “decent analogy” when he told MPs that London’s financial ecosystem was like a Jenga tower, where if you pull one small piece out nothing could happen or it could have a dramatic impact.
The Bank governor said: “Just like when you play Jenga, you start early and there are some pieces which you can take out without imperilling the tower.”