The Bank of England (BoE) has published a record of the Financial Policy Committee’s (FPC) meetings held on 28 June and 1 July 2016. The FPC reviews financial systems and economic developments since its meeting in March 2016, as set out in detail in the July 2016 Financial Stability Report. In particular, at its meeting on 1 July 2016, following its discussions on 28 June 2016, the FPC:

  • reduced the UK countercyclical capital buffer rate from 0.5% to 0% of banks’ UK exposures with immediate effect;
  • recommended to the PRA that, where existing PRA supervisory buffers of PRA-regulated firms reflect risks that would be captured by a UK countercyclical capital buffer rate, it reduce those buffers, as far as possible and as soon as practicable, by an amount of capital which is equivalent to the effect of a UK countercyclical capital buffer rate of 0.5%;
  • welcomed the BoE’s announcement that it will continue to offer indexed long-term repo operations on a weekly basis until end-September 2016. This is a precautionary step to provide additional flexibility in the BoE’s provision of liquidity insurance, further reinforcing the ability of firms to draw on their own liquidity buffers; and
  • supported the position of the PRA to allow insurance companies to use flexibility in Solvency II regulations to recalculate transitional measures. These measures smooth the impact of those new regulations.

The FPC’s next policy meeting will be held on 20 September 2016 and the record of that meeting will be published on 3 October 2016.

View FPC record of 28 June and 1 July 2016 meetings, 12 July 2016