FPC Decides to Increase the Countercyclical Capital Buffer in UK
At the Bank of England's Financial Policy Committee (FPC) meeting, which was held on June 21, 2017, the key developments included the decision to increase the UK countercyclical capital buffer (CCyB) rate to 0.5%, from 0%. Furthermore, in the absence of a material change in the outlook, and consistent with its stated policy for a standard risk environment and of moving gradually, the FPC set out that it expects to increase the rate to 1% at its November meeting. The CCyB rate is reviewed on a quarterly basis.
Additionally, the PRA and FCA’s intentions to publish, in July, their expectations of lenders in the consumer credit market were supported. It was agreed to bring forward the assessment of stressed losses on consumer credit lending in the Bank’s 2017 annual stress test, to inform its assessment at its next meeting of any additional resilience required in aggregate against this lending. FPC also agreed that it intends to set the minimum leverage requirement at 3.25% of non-reserve exposures, subject to consultation. This is consistent with its previous commitment to restore the level of resilience delivered by its leverage ratio standard to the level it delivered in July 2016, before the FPC excluded central bank reserves from the leverage ratio exposure measure.
FPC discussed the risks faced by the UK financial system and the resilience of the system to those risks. Its aim is to ensure the financial system can continue to provide essential services to the real economy, even in adverse circumstances. The FPC’s next policy meeting will be on September 20, 2017.
Related Link: Meeting Summary (PDF)
Keywords: Europe, United Kingdom, BOE, FPC, CCyB, Leverage Ratio, Banking
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