In its latest meeting, the Financial Policy Committee focused on:
- the outlook for UK financial stability generally: it thought these were standard, excepting the Brexit risks, with risks from global vulnerability still being material. Risks from certain markets in the US and in China are elevated, but there seems to be some sign of increasing domestic risk appetite;
- Brexit risks to stability: the 2017 stress test was aimed at showing the UK banking system could support the real economy through a disorderly Brexit. Although a disorderly Brexit combined with external factors such as a severe global recession could result in more severe conditions, the FPC continues to consider this unlikely and so does not advise that Brexit risks should result in banks needing additional capital buffers. However, it still notes the considerable risks to the financial services markets, especially where actions from both the UK and EU are needed to ensure services remain available;
- risks from crypto-assets: FPC thinks these do not currently pose a material risk but would act if linkages between crypto-assets and systemically important financial institutions or markets were to grow significantly; and
- the main elements of the design of the 2018 bank stress test: this will be the same as for the 2017 test, with the hurdle rates evolving from those used in previous years.