Coronavirus (COVID-19)—FPC to prepare additional financial stability report

Coronavirus (COVID-19)—FPC to prepare additional financial stability report

The Financial Policy Committee (FPC) has issued a statement following its meeting on 9 April 2020 in which it reviewed developments in the financial system related to the outbreak and spread of the coronavirus (COVID-19). The FPC usually assesses risks to UK financial stability and the resilience of the UK financial system and publishes that assessment in biannual Financial Stability Reports. Given the material developments in recent weeks due to COVID-19, however, the FPC plans to publish an additional interim Financial Stability Report on 7 May 2020.

In its meeting, the FPC noted that economic activity was reducing very sharply due to the severity of the disruption associated with COVID-19, and that there have been ‘very significant falls in a range of financial asset prices’. 

The interim report, which will be published alongside the May Monetary Policy Report issued by the Monetary Policy Committee (MPC), will contain the FPC’s assessment of the risks to UK financial stability and the resilience of the UK financial system to ongoing economic and market shocks. It will:

• draw on evidence from recent weeks—the FPC notes in its statement that sharp revisions to the economic outlook and associated adjustment in financial markets have not translated to difficulties in the core banking system as they did during the financial crisis, due to much higher Tier capital levels

• take into account the economic assessment to be set out in the May Monetary Policy Report

• reflect the unprecedented actions taken to help alleviate the severe cash flow problems facing households and corporates over this period, including measures taken by the government, the FPC itself, the Bank of England, the MPC, the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA)

Source: Financial Policy Committee statement

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