It is the Bank of England stability review of the United Kingdom financial system as a whole. It is prepared by the Financial Policy Committee (FPC), the Bank committee responsible for macroprudential policy, policy that limits system-wide financial risk. The FPC identifies the risks faced by the system and weighs them against measured resilience, with no single formula, index, or weighting.
It rests on Section 9W of the Bank of England Act 1998, as amended by the Financial Services Act 2012. Each issue is presented to Parliament pursuant to Section 9W(10). Running since October 1996 as a biannual Financial Stability Review, it took the report name in 2006 and became a statutory twice-yearly duty in 2013. It is not a monetary policy decision, inflation forecast, or rate forecast, since those belong to the Monetary Policy Committee and its Monetary Policy Report.
It appears twice per calendar year, normally one mid-year edition around June or July and one end-year edition around November or December. It is published on the Bank website, usually in the morning United Kingdom time, with the end-year edition advertised for 10.30am.
Each issue uses data available as at a stated cut-off date a few days before publication. Issues are never revised and stay in the archive unchanged, though policy views can change at later meetings.
Each issue arrives with the FPC meeting Record for the quarter, a press conference, and downloadable chart data. The end-year edition adds the annual stress test results for major United Kingdom banks.
No single formula moves the report. Standing sections track risks and resilience, joined by a rotating focus topic. A past focus covered growth support and funding for high-growth small firms.
The 05 July 2016 issue shows the mechanism, after the FPC had named referendum risks in March as the top near-term domestic risk. It followed the 23 June 2016 referendum on United Kingdom membership of the European Union, as some risks began to crystallise.
Between 23 June and 01 July the sterling exchange rate index fell by 9%, while short-term sterling-dollar volatility hit a post-Bretton Woods high. Bank shares fell on average by 20% and domestic shares by 10%. The 10-year government bond yield fell by 52 basis points and corporate bond yields by about 25 basis points.
The FPC cut the buffer from 0.5% to 0% with immediate effect. That freed 5.7 billion pounds of buffers for up to 150 billion pounds of extra lending, holding at 0% until at least June 2017.
Key point: the report never forecasts rates or inflation and never sets Bank Rate, the central policy rate. Those sit with the Monetary Policy Committee and its Monetary Policy Report.
No historical data available
