![]() The FPC will also consult on a proposal to change the metric used to determine Other Systemically Important Institutions (O-SII) buffer rates to exclude central bank reserves, effective from the 2023 Prudential Regulation Authority (PRA) assessment of individual firm buffer rates. In line with the standard implementation period, any subsequent increase would not be expected to take effect until the end of 2022 at the earliest. It will re-evaluate the appropriate level of the UK CCyB rate in light of the risk environment at that time. The FPC has previously stated that it expects to maintain a 0% UK CCyB rate until at least December 2021. To support bank lending to households and businesses as the economy recovers, the FPC is maintaining the UK Countercyclical Capital Buffer (CCyB) rate at 0%. It is in banks’ collective interest to support viable, productive businesses, rather than seek to defend capital ratios by restricting lending. The FPC expects banks to use all elements of their capital buffers as necessary to support the economy through the recovery. The FPC continues to judge that the banking sector remains resilient to outcomes for the economy that are much more severe than the Monetary Policy Committee’s central forecast in the August Monetary Policy Report. The UK banking system has the capacity to continue to provide that support. Households and businesses are likely to need continuing support from the financial system as the economy recovers and the Government’s support measures continue to unwind. The pace of recovery has slowed recently, and inflationary pressures have risen. UK GDP is projected to recover further over the remainder of the year towards its pre-pandemic level, although the outlook for the economy remains uncertain. The UK financial system has provided support to households and businesses to weather the economic disruption from the Covid pandemic, reflecting the resilience that has been built up since the global financial crisis alongside the exceptional policy responses of the UK authorities. ![]() The outlook for financial stability Support for the economy during the recovery The Financial Policy Committee (FPC) aims to ensure the UK financial system is prepared for, and resilient to, the wide range of risks it could face – so that the system can serve UK households and businesses in bad times as well as good. Regulation needs to develop quickly enough, both domestically and at a global level, to address the risks they could pose in the future. We are also working with UK and other international authorities to make market-based finance more resilient to shocks, so that financial markets can support the economy in bad times as well as good.Ĭryptoasset markets continue to grow rapidly, but currently pose limited risk to UK financial stability. And the prices of some financial assets appear high relative to historical norms. For example, there are fewer protections in place when investors lend to companies with high levels of debt in so-called “leveraged loan” markets. There is evidence that investors are taking higher levels of risk in some global markets. If financial markets do not function properly, businesses may be unable to raise funds through those markets. There is evidence of heightened risk-taking in some financial marketsįinancial markets play an important role in supporting the economy and provide a substantial amount of finance to businesses. News and publications Open News and publications sub menu.Option-implied probability density functions Gross Domestic Product Real-Time Database ![]() The PRA’s statutory powers and enforcement Money Markets Committee and UK Money Markets Code Greening our Corporate Bond Purchase Scheme (CBPS) Operational resilience of the financial sector Wholesale cash distribution in the futureįinancial market infrastructure supervision
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