BoE has launched its first system-wide exploratory scenario exercise. The exercise will include banks, insurers, CCPs and a variety of funds and will look to see how all these market players behave in stressed market conditions. BoE says that market-based finance has been increasingly prone to sudden liquidity stresses in periods of market volatility and it wants to understand the risks to and from NBFIs and banks and how this drives their behaviour – and therefore how this can act to amplify market shocks. Participants will be involved in the design of the scenario, which will look to evaluate the impact of a severe but plausible stress.
BoE launches system-wide exploratory scenario
