The December 2021 Financial Stability Report concludes:
- recovery from the pandemic continues, and uncertainty also continues, but UK banks’ capital and liquidity positions remain strong;
- the FPC is keeping an eye on debt vulnerabilities but says UK household finances have generally remained resilient;
- UK corporate debt vulnerabilities have increased relatively moderately and global debt vulnerabilities remain material;
- the CCyB will increase from 0% to 1% from 13 December 2022, although indications suggest it should return to 2% – but FPC will hope to do this in Q2 2022 to take effect a year after;
- measures to guard against excessive build up of mortgage debt are sufficient;
- the LTI flow limit Recommendation will be maintained, but there will be a consultation in mid-2022 on withdrawing the FPC’s affordability test;
- risk remain that threaten the stability of market based finance;
- crypto assets and associated markets and activities continue to grow heavily and, while risks are currently limited, they will grow as the markets grow, so enhanced regulatory and law enforcement frameworks are needed,