The Bank of England (BoE) has launched its first system-wide exploratory scenario (SWES) exercise, with the aim of improving understanding of the behaviours of banks and non-bank financial institutions (NBFIs) in stressed financial market conditions.
The exercise will also be used to investigate how these behaviours and market dynamics can amplify shocks in markets and potentially bring about risks to UK financial stability.
Recent events have shown that market-based finance (MBF) has been increasingly prone to sudden liquidity stresses during periods of market volatility. Examples of this include the March 2020 ‘has for cash’ and the adverse gilt dynamics in September as a result of the mini-Budget.
Participating firms will include large banks, insurers, central counter-parties and a variety of funds (pension funds, hedge funds, and funds managed by asset managers), reflecting the range of institutions that engage in UK financial markets. As well as participating in the exercise, the firms will also be actively engaged in both the design and execution of the exercise.
Participants will be asked to evaluate the impact of a severe but plausible stress to global financial markets, and then to consider what action they would take in response to the scenario, focusing on behaviours in UK financial markets markets.
The BoE will then seek to understand the collective actions and responses of the firms and how they might amplify the initial stress in UK financial markets. Working closely with the Financial Conduct Authority (FCA) and the Pensions Regulator, the BoE will collect data and information from various parts of the financial system-wide and sector-specific insights.
Deputy governor for financial stability, Jon Cunliffe, said: “We regularly run scenario exercises with a variety of firms which support our efforts to protect and enhance the stability of the UK financial system. The launch of this exercise will provide valuable insight into the system-wide dynamics for banks and non-banks following a severe but plausible stress to financial markets.”
Latest News
-
Regulators urged to improve policy communications to advice sector
-
Retail investors withdraw £1.8bn from funds in August
-
Annual house price growth up to 2.2% in September – Nationwide
-
Hargreaves Lansdown hits record AUA in FY25
-
Advisers report surge in IHT enquiries ahead of Budget
-
Mercer completes acquisition of Fundhouse
NEW BUILD IN FOCUS - NEW EPISODE OF THE MORTGAGE INSIDER PODCAST, OUT NOW
Figures from the National House-Building Council saw Q1 2025 register a 36% increase in new homes built across the UK compared with the same period last year, representing a striking development for the first-time buyer market. But with the higher cost of building, ongoing planning challenges and new and changing regulations, how sustainable is this growth? And what does it mean for brokers?
The role of the bridging market and technology usage in the industry
Content editor, Dan McGrath, sat down with chief operating officer at Black & White Bridging, Damien Druce, and head of development finance at Empire Global Finance, Pete Williams, to explore the role of the bridging sector, the role of AI across the industry and how the property market has fared in the Labour Government’s first year in office.
Does the North-South divide still exist in the UK housing market?
What do the most expensive parts of the country reveal about shifting demand? And why is the Manchester housing market now outperforming many southern counterparts?
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance, to explore how regional trends are redefining the UK housing, mortgage and buy-to-let markets.
The new episode of The Mortgage Insider podcast, out now
Regional housing markets now matter more than ever. While London and the Southeast still tend to dominate the headlines from a house price and affordability perspective, much of the growth in rental yields and buyer demand is coming from other parts of the UK.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
In this episode of the Barclays Mortgage Insider Podcast, host Phil Spencer is joined by Lucian Cook, Head of Research at Savills, and Ross Jones, founder of Home Financial and Evolve Commercial Finance.
© 2019 Perspective Publishing Privacy & Cookies
Recent Stories