System-wide exploratory scenario objectives and participating firms
The Bank publicly launched its system-wide exploratory scenario (SWES) in June 2023. The SWES aims to improve our understanding of the behaviours of banks and non-bank financial institutions during stressed financial market conditions and how those behaviours might interact to amplify shocks in UK financial markets that are core to UK financial stability.
There are just over 50 participants in the SWES – including banks, insurers, central counterparties, funds managed by asset managers, hedge funds, and pension funds. We are working closely with the Financial Conduct Authority, The Pensions Regulator, and other domestic and international regulators on the SWES.
SWES timeline
In November 2023 the Bank launched Round 1 of the scenario phase of the SWES. During the scenario phase, we are asking SWES participants to consider the impact of a hypothetical stress scenario, tell us how it would impact their business, and the actions they would take in response.
In June 2024 the Bank published an update on the SWES in the Bank’s Financial Stability Report, summarising observations from participants’ Round 1 responses. As planned, the Bank is now running a second round of the scenario phase with participants to evolve the analysis based on the behaviours and interactions observed in Round 1.
Results and publications
The Bank expects to publish a final report on the SWES in late 2024 once the exercise has concluded. Published materials will not provide information on individual firms or any commercially sensitive information.