On 19 June 2026, the Bank of England (BoE) announced the launch of the scenario phase of the private markets system-wide exploratory scenario. The BoE has also sent participants a hypothetical stress scenario that details a severe, but plausible, global macro-economic recession over a five-year period.
Background
In December 2025, the BoE launched its second system-wide exploratory scenario (SWES) exercise that will focus on developments in the private markets ecosystem. The BoE have now begun the scenario analysis phase of the SWES and have sent participants a hypothetical stress scenario that details a severe, but plausible, global macro-economic recession over a five-year period. The severity of this shock has been calibrated to represent a tail-risk outcome for the global economy and is broadly consistent with the severity of other stress tests the BoE have run, such as the Bank Capital Stress Test (BCST).
Purpose
The private markets SWES scenario is a hypothetical scenario and not a forecast of macroeconomic and financial conditions. The scenario is a tool to allow the BoE to explore the impact of a stylised shock to the private market ecosystem and related credit markets. The exercise will improve the understanding of key actors in the private markets ecosystem and their actions under stress. It will allow the BoE to explore potential vulnerabilities and whether and how these may transmit across the ecosystem to pose systemic risks.
Industry collaboration
The private markets SWES is being run as a collaborative exercise. The BoE have worked closely with participants, industry experts and regulators to inform the design of the private markets SWES scenario. The BoE has also completed initial information gathering which will help it to address key information gaps on the private markets ecosystem and has informed the design of the scenario.
Round 1
The BoE expects to use Round 1 of the private markets SWES to better understand how banks and non-banks active in private markets would respond to a severe but plausible global downturn, how their actions interact at a system level, and whether these interactions can amplify stress across the financial system and pose risks to UK financial stability and the provision of finance to the UK real economy. Following Round 1 the BoE will provide participants with aggregated feedback on how other participating firms acted and any implications for the financial system and real economy. Firms will then have the options to update their responses based on this feedback.
Next steps
The BoE will share findings from its initial information gathering in the July Financial Stability Report.
Interim findings from Round 1 will be shared later this year, and the final report in 2027.