United Kingdom: Financial Sector Assessment Program-Select Issues in Systemic Risk Oversight and Macroprudential Policy

IMF Staff Country Reports, April 8, 2022

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The United Kingdom’s macroprudential policy framework has proven its effectiveness.
After the Global Financial Crisis (GFC) of 2007–09, the United Kingdom:
- assigned the Bank of England (BOE) a clear financial stability mandate;
- created a new Financial Policy Committee (FPC) to set macroprudential policy;
- shifted to a “twin peaks” model of financial oversight.
The 2016 Financial Sector Assessment Program (FSAP) concluded that the new framework appeared appropriate for effectively conducting macroprudential policy.
The 2021 FSAP provides an opportunity to review the framework’s performance in building systemic resilience through the financial cycle, including market volatility resulting from the Brexit vote and the COVID-19 pandemic.

Effectiveness: The framework is described as having “proven its effectiveness.”
Institutional changes since the GFC of 2007–09 are highlighted as core to resilience:
- BOE’s financial stability mandate;
- establishment of the FPC;
- adoption of the “twin peaks” oversight model.
Evaluation scope of 2021 FSAP:
- Review of performance across the financial cycle;
- Assessment of resilience to shocks including Brexit-related market volatility and the COVID-19 pandemic.