The Bank of England (BoE) has published the record of the Financial Policy Committee (FPC) meeting held on 25 July 2016. In particular, at its meeting, the FPC:
- recommended to the PRA that, when applying its rules on the leverage ratio, it considers allowing firms to exclude from the calculation of the total exposure measure those assets constituting claims on central banks where they are matched by deposits accepted by the firm that are denominated in the same currency and of identical or longer maturity. The FPC made the recommendation to the PRA on a comply or explain basis, under Section 9Q(3) of the Bank of England Act 1998 (as amended by the Financial Services Act 2012);
- agreed to revoke its existing direction to the PRA on the UK leverage ratio framework, in order to allow the PRA to implement the FPC’s recommendation with immediate effect. Subject to its planned review of the leverage ratio framework in 2017, the FPC intends to take steps to ensure that the change can be put in place on a permanent basis using its powers of direction, which will require asking HM Treasury for a change in the relevant statutory instrument; and
- set out its intention to recalibrate the UK leverage ratio standard to adjust for the impact of the exclusion of central bank reserves. It will consult and decide on the appropriate form of this recalibration as part of the 2017 review.
The FPC’s next policy meeting will be on 20 September 2016 and the record of that meeting will be published on 3 October 2016
View FPC record of 25 July 2016 meeting, 4 August 2016