Featured Product

    BoE Policy Committee Deliberates on CCyB Rate and Cyber Stress Tests

    March 26, 2021

    The Financial Policy Committee (FPC) of BoE met recently to identify risks to financial stability and agree on policy actions to safeguard the resilience of the UK financial system. As per the published meeting summary, FPC decided that it expects to maintain the UK countercyclical capital buffer (CCyB) rate at 0% until at least December 2021. Any subsequent increase would not be expected to take effect until the end of 2022. The pace of return to a standard UK CCyB rate in the region of 2% would depend on banks’ ability to rebuild capital while continuing to support the UK economy, households, and businesses. FPC judged that this guidance should help to give banks clarity that they could use capital buffers as necessary. Other topics of discussion at the meeting included the status of LIBOR transition, continued monitoring of financial stability implications of Brexit, results of joint BoE-FCA review of open-ended investment funds, and the next cyber stress testing exercise.

    The work on the next cyber stress test has already restarted and FPC would provide more information on the 2022 cyber stress test in due course. At the March 2021 meeting, FPC discussed its impact tolerance for payments services and initial plans for a 2022 stress test. FPC agreed that the 2022 cyber test should involve a scenario where data integrity had been compromised. This would build on the finance industry’s own work. FPC agreed that the 2022 test should target the most systemic contributors in the end-to-end payments chain, as in the event of disruption, their ability to resume services in a timely manner was particularly important for UK financial stability. FPC further agreed to focus the next cyber stress test on retail payments, so that the results from the test could help shed light on the potential financial stability impact of disruption to retail payments. Building on the lessons of the 2019 pilot, the 2022 test would be expanded to include second-round effects. Participants would be asked to document how they would meet the FPC’s impact tolerance, or, if they were not able to do so, what the impact might be. Firms would also be asked to document any barriers to meeting the FPC’s impact tolerance and to explore the extent to which their recovery options might depend on the actions of other participants. Finally, FPC agreed that the 2022 test would be an exploratory test, rather than a formal pass-fail assessment. Participating firms would, however, be expected to share their findings and plans with their supervisors. 


    Related Links

    Keywords: Europe, UK, Banking, Basel, Regulatory Capital, CCyB, COVID-19, Cyber Risk, Stress Testing, Data Integrity, IBOR Reform, Financial Stability, FPC, BoE

    Featured Experts
    Related Articles

    EBA Finalizes Templates for One-Off Climate Risk Scenario Analysis

    The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.

    November 28, 2023 WebPage Regulatory News

    EBA Mulls Inclusion of Environmental & Social Risks to Pillar 1 Rules

    The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.

    October 31, 2023 WebPage Regulatory News

    BCBS Consults on Disclosure of Crypto-Asset Exposures of Banks

    As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.

    October 19, 2023 WebPage Regulatory News

    BCBS and EBA Publish Results of Basel III Monitoring Exercise

    The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.

    October 18, 2023 WebPage Regulatory News

    PRA Updates Timeline for Final Basel III Rules, Issues Other Updates

    The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.

    October 18, 2023 WebPage Regulatory News

    US Treasury Sets Out Principles for Net-Zero Financing

    The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.

    October 17, 2023 WebPage Regulatory News

    EC Launches Survey on G7 Principles on Generative AI

    The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.

    October 14, 2023 WebPage Regulatory News

    ISSB Sustainability Standards Expected to Become Global Baseline

    The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.

    September 18, 2023 WebPage Regulatory News

    IOSCO, BIS, and FSB to Intensify Focus on Decentralized Finance

    Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.

    September 18, 2023 WebPage Regulatory News

    BCBS Assesses NSFR and Large Exposures Rules in US

    The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.

    September 14, 2023 WebPage Regulatory News
    RESULTS 1 - 10 OF 8938