Financial Policy Committee
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The Financial Policy Committee (FPC) is a committee within the Bank of England responsible for safeguarding the stability and resilience of the financial system in the UK. It was established under the Financial Services Act 2012 as one of the key reforms to strengthen financial regulation and oversight following the global financial crisis.
Identifying and assessing systemic risks: The FPC monitors and assesses risks to the stability of the financial system. It identifies and analyses potential threats, vulnerabilities, and imbalances that could have widespread implications for the stability of the UK financial system.
Setting macroprudential policy: The FPC formulates and sets macroprudential policy measures to mitigate systemic risks and enhance the resilience of the financial system. These policy tools aim to address risks at a systemic level rather than focusing on individual institutions. They can include measures such as capital buffer requirements, loan-to-value ratio limits, and stress testing.
Recommendations and directions: The FPC issues recommendations and directions to regulatory authorities and relevant institutions to address identified risks and vulnerabilities. These recommendations and directions are aimed at preventing or mitigating potential threats to financial stability.
Coordinating with regulatory bodies: The FPC works closely with other regulatory bodies, including the Prudential Regulation Authority and the Financial Conduct Authority, to ensure a coordinated approach to financial stability. It collaborates with these bodies to share information, align policies, and coordinate regulatory actions.
International engagement: The FPC actively engages with international counterparts and participates in international forums to contribute to the development of global financial stability policies. It collaborates with other central banks, regulatory bodies, and international organisations to share knowledge, experiences, and best practices.
Communication and transparency: The FPC communicates its assessment of risks, policy decisions, and recommendations to the public, market participants, and relevant stakeholders. It aims to enhance transparency and promote understanding of its role and actions to maintain public confidence in the stability of the financial system.
The FPC operates independently within the governance structure of the Bank of England. It meets regularly to assess risks, analyse data, and formulate policy responses to maintain the stability and resilience of the financial system, contributing to the overall economic stability of the UK.
Identifying and assessing systemic risks: The FPC monitors and assesses risks to the stability of the financial system. It identifies and analyses potential threats, vulnerabilities, and imbalances that could have widespread implications for the stability of the UK financial system.
Setting macroprudential policy: The FPC formulates and sets macroprudential policy measures to mitigate systemic risks and enhance the resilience of the financial system. These policy tools aim to address risks at a systemic level rather than focusing on individual institutions. They can include measures such as capital buffer requirements, loan-to-value ratio limits, and stress testing.
Recommendations and directions: The FPC issues recommendations and directions to regulatory authorities and relevant institutions to address identified risks and vulnerabilities. These recommendations and directions are aimed at preventing or mitigating potential threats to financial stability.
Coordinating with regulatory bodies: The FPC works closely with other regulatory bodies, including the Prudential Regulation Authority and the Financial Conduct Authority, to ensure a coordinated approach to financial stability. It collaborates with these bodies to share information, align policies, and coordinate regulatory actions.
International engagement: The FPC actively engages with international counterparts and participates in international forums to contribute to the development of global financial stability policies. It collaborates with other central banks, regulatory bodies, and international organisations to share knowledge, experiences, and best practices.
Communication and transparency: The FPC communicates its assessment of risks, policy decisions, and recommendations to the public, market participants, and relevant stakeholders. It aims to enhance transparency and promote understanding of its role and actions to maintain public confidence in the stability of the financial system.
The FPC operates independently within the governance structure of the Bank of England. It meets regularly to assess risks, analyse data, and formulate policy responses to maintain the stability and resilience of the financial system, contributing to the overall economic stability of the UK.
