Financial stability

The Bank of England is responsible for making sure the financial system is safe and sound.


The economy is only healthy if people have confidence in financial institutions, markets and infrastructure. We play an important role in maintaining financial stability, which we do through a number of key mechanisms, policies and frameworks, set out below.

The Bank of England sets out its strategy for maintaining Financial Stability at least every three years.

PDFFinancial Stability Strategy

The Financial Policy Committee

The Bank of England’s Financial Policy Committee (FPC) identifies, monitors and takes action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The FPC also has a secondary objective to support the economic policy of the Government.

Members of the FPC

The FPC also gets a remit letter, typically annually, from the Chancellor. The Governor, on behalf of the FPC, sends a formal response to the Chancellor’s letter.

Remit and response letters

Financial Policy Committee meetings

The FPC usually meets four times a year. 

We publish a record and a summary of its meetings twice a year. In addition, we publish a record of their meeting when we publish the Financial Stability Report twice year.

In March 2019, we replaced the FPC ‘statement’ with a ‘summary’. Before then we also published the FPC’s record around a week after their statement.

Records, summaries and statements

The Financial Stability Report

Twice a year, the FPC publishes a Financial Stability Report, which sets out the committee’s view on the main risks to financial stability and assesses how prepared the financial system is to withstand these risks.

The Financial Stability Report also summarises the FPC’s recent activities and assesses the impact of any actions it has taken.

Financial Stability Reports

The Financial Stability in Focus publication complements the Financial Stability Report and sets out the FPC’s view on specific topics related to financial stability.

Financial Stability in Focus

Stress testing

The FPC, alongside the Prudential Regulation Committee (PRC), contributes to the design and calibration of the Bank’s stress testing framework. Stress tests allow the FPC and the PRC to assess banks’ resilience and make sure they have enough capital to withstand shocks, and to support the economy if a stress does materialise.

Stress testing

Financial Policy Committee powers

The FPC has two sets of powers – powers of direction and power of recommendation. The FPC has the power to direct regulators to take action on a number of specific policy tools. In addition, the FPC can make recommendations to anyone to reduce risks to financial stability.

FPC powers of direction:

  • set the countercyclical capital buffer (CCyB) rate for the UK.
  • set sectoral capital requirements for UK firms.
  • set a leverage ratio requirement for UK firms.
  • set loan-to-value and debt-to-income limits for UK mortgages on owner-occupied properties.
  • set loan-to-value and interest cover ratio limits for UK mortgages on buy-to-let properties.

Countercyclical capital buffer rates

The countercyclical capital buffer (CCyB) is a tool that enables the FPC to adjust the resilience of the banking system. The FPC increases the CCyB when it judges that risks are building up. This means that banks are required to have an additional cushion of capital with which to absorb potential losses, enhancing their resilience and contributing to a stable financial system.

Relevant UK CCyB rate announcements

Country Current CCyB rate Implementation date Pending CCyB rate Implementation date
Bulgaria 0.50% 01/10/2021 1.00% 01/10/2022

1.50% 01/01/2023
Czech Republic 0.50% 01/07/2020 1.00% 01/07/2022
1.50% 01/10/2022
Denmark 0.00% 12/03/2020 1.00% 30/09/2022
      2.00% 31/12/2022
Hong Kong 1.00% 12/10/2020
Luxembourg 0.50% 01/01/2021
Norway 1.00% 13/03/2020 1.50% 30/06/2022
      2.00% 31/12/2022
Romania  0.00%  01/01/2016  0.50%  17/10/2022
Slovakia 1.00% 01/08/2020
Sweden  0.00%  16/03/2020  1.00%  29/09/2022 

The information in this table reflects policy decisions taken on or before 9 March 2022 and published on publically available websites.
All EEA states not listed above have set their CCyB rate at 0%.
The following countries have released their full ccyb and cancelled all future increases: Belgium, France, Germany, Iceland, Ireland and Lithuania.

Resolution: managing failed financial institutions

We use a process called resolution to intervene in and manage failed financial firms to make sure the impact on the economy is kept to a minimum.


Supervising financial market infrastructures

Financial market infrastructures, such as payment settlement systems and central counterparties, play a key role in keeping the economy moving. The Bank of England is responsible for overseeing these important services.

Financial market infrastructures

Prudential regulation

We regulate around 1,500 banks, building societies, credit unions, insurers and investment firms to make sure they are safe and sound. 

Prudential regulation

This page was last updated 24 March 2022

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