The records of the FPC meetings on 25 November and 1 December note that:
- risks to financial stability have increased during 2025 for a variety of reasons, including fragmentation of trade and financial markets;
- many risky asset valuations are still materially stretched, specifically for tech companies focussed on AI, where debt finance is increasing as firms look to scale. As interconnectedness between AI firms and credit markets grows, the financial stability risks from losses on lending in the event of an asset price correction also increase;
- credit spreads are still relatively compressed, and although the impact of two recent defaults in the US has been limited, a diverse range of market participants were exposed, so it is important for all to appreciate what their exposures are and that firms do not rely on credit ratings as a substitute for due diligence;
- the UK is exposed to global shocks due to being an open economy with a large financial centre;
- generally, the UK banking system remains strong and well capitalised as UK household and corporate indebtedness stays low;
- the FPC thinks the appropriate benchmark for Tier 1 capital is around 13% of RWAs, lower than its last benchmark;
- the FPC has assessed areas where the financial sector could help more, such as supplying debt or equity finance to high-growth firms;
- the CCyB stays at 2%;
- operational resilience of of critical importance and firms and FMIs alike should take further action to build resilience;
- the FPC agrees a system wide exploratory exercise in the private markets would be beneficial;
- the FPC agrees on the reforms to insurance solvency; and
- the FPC supports the proposed stablecoin regime.