Bank of England’s Financial Policy Committee assessed that the UK banking system could support the real economy even through a disorderly Brexit.
As previously set out, the FPC said the Brexit risks do not warrant additional capital buffers for banks.
The FPC said it is monitoring preparations to mitigate disruption to financial services that could arise from Brexit. Although progress has been made, material risks remain.
Domestic risks remain standard overall. The committee observed some reduction in domestic risk appetite, although it remains strong.
The FPC also observed that risks from global vulnerabilities remain material and have increased. The committee assessed that increases in Italian government bond yields indicate rising risks in the euro area. Also, intensified trade tensions and highly elevated debt levels in China pose risks.
The FPC maintained the countercyclical capital buffer rate at 1 percent. The FPC will conduct the 2018 stress test and review the adequacy of the 1 percent CCyB rate.