The Financial Policy Committee of the Bank of England has published its latest Financial Stability Report. Among other things the report notes that there will be a period of uncertainty and adjustment following the result of the referendum. It will take time for the UK to establish new relationships with the EU and the rest of the world. Some market and economic volatility is to be expected as this process unfolds. However, the report also notes that during this period of uncertainty and adjustment, the resilience of the UK financial system is grounded on:
- substantial capital and liquidity buffers, which have been shown in repeated stress tests to enable banks to absorb extremely severe economic and market shocks without amplifying those shocks;
- the regulatory framework of the UK that allows capital and liquidity buffers to be drawn on, as needed, to allow the system to cushion shocks and maintain the provision of financial services to the real economy; and
- an institutional framework that promotes co-ordinated, evidence-based responses to risks.
View Bank of England Financial Stability Report, 5 July 2016