BoE has published the latest phase of the System Wide Exploratory Scenario, which it first launched in June. The SWES is intended to help BoE understand the risks to and from non-bank financial institutions, and the behaviour of both banks and non-banks in stress. From that it will investigate what risks these behaviours and market dynamics can pose to financial stability.
More than 50 institutions from the banking, insurance, CCP, asset manager, hedge fund and pension fund sectors are taking part in the SWES. BoE has given the participants a severe but plausible stress scenario, which incorporates many elements from recent events, and asked them to respond in January. It will then launch a second round of the scenario phase next June and report by the end of 2024.