Bank of England Committee Reports Heightened Risks to Financial Stability
The Financial Policy Committee warned of rising interconnected vulnerabilities and global market pressures while maintaining the UK countercyclical capital buffer at 2%.
By Orion Desk
The Financial Policy Committee has identified a worsening risk outlook, noting that geopolitical conflicts have driven sovereign bond yields to levels unseen since 2008. These global pressures, coupled with rapid AI-related debt issuance and potential volatility in credit markets, have increased the likelihood of simultaneous systemic shocks.
Despite these external challenges, the Committee considers the domestic banking system robust and well-capitalized. It has decided to maintain the UK countercyclical capital buffer at 2% and will proceed with planned leverage ratio reforms, emphasizing that gilt repo market resilience remains a priority for managing financial stability.
Originally published by Bank of England
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