On 9 October 2019, the Bank of England (BoE) published the financial policy summary and record (FPSR) of the Financial Policy Committee (FPC) meeting on 2 October 2019. At this meeting, the FPC judged that:

  • the core of the UK financial system is resilient to and prepared for the wide range of risks it could face, including a worst-case disorderly Brexit;
  • the FPC is maintaining the UK countercyclical capital buffer rate at 1%;
  • most risks to UK financial stability that could arise from disruption to cross-border financial services in a no-deal Brexit have been mitigated;
  • the core of the UK banking system remains resilient to severe global and market stress;
  • the FPC continues to judge that the mismatch between redemption terms and the liquidity of some funds’ assets has the potential to become a systemic risk. The BoE and FCA will undertake a joint review to assess how funds’ redemption terms might be better aligned with the liquidity of their assets in order to minimise financial stability risks without compromising the supply of productive finance;
  • the FPC has agreed a set of principles to ensure payment systems support financial stability; and
  • there is no justification for firms continuing to increase their exposures to LIBOR. In Q4, the FPC will consider further potential policy and supervisory tools that could be deployed by authorities to reduce the stock of legacy LIBOR contracts to an irreducible minimum ahead of end-2021.