BoE publishes stress test results and Financial Stability Report: BoE has published:
- its Financial Stability Report, which sets out the Financial Policy Committee’s (FPC) assessment of the outlook for the stability and resilience of the financial sector. The report recognises some further risks to financial stability over the past six months, largely due to oil price fluctuation. BoE had expected further risks to stability from the housing markets, but these have not materialised. It says banks are on the way to greater financial resilience but notes that recent market scandals mean they must also reassess the strength of their governance to bring back investor confidence. The FPC decided to set the countercyclical capital buffer rate at 0%;
- the Systemic Risk Survey, which quantifies and tracks market participants’ perceptions of systemic risks. This showed an increase in the probability of a high impact event, but also increased confidence in the UK financial markets. Most respondents continue to see geo-political risk as the hardest to manage; and
- the 2014 UK stress test of the eight major UK banks and building societies - Barclays Bank, Co-operative Bank, HSBC Bank, Lloyds Banking Group, Nationwide Building Society, Royal Bank of Scotland, Santander UK and Standard Chartered. The PRA's analysis of the results concluded the test did not reveal capital inadequacies for five banks, based on their balance sheets at end-2013. As at end-2013, PRA said the Co-operative Bank, Lloyds Banking Group and Royal Bank of Scotland needed to strengthen their capital position further. However, it required only Co-operative Bank to submit a revised capital plan because of improvements the other banks had made during the year. The FPC judged that no system-wide, macroprudential actions were needed in response to the stress test.
BoE updates on transparency and accountability: BoE has published a series of documents on its website relating to transparency and accountability. These include a review by Kevin Warsh of the BoE's Monetary Policy Committee. In addition, they outline the response of the BOE to the review and next steps it intends to take. (Source: BoE Updates on Transparency and Accountability)