BOE FSR: UK banks can cope with no-deal Brexit and trade war, GBP stays firmer


In its semi-annual Financial Stability Report (FSR), the Bank of England (BOE) warns of the risks of a no-deal Brexit.

Key Headlines:

Perceived likelihood of no-deal Brexit has risen since start of year, UK banks remain resilient

Significant market volatility likely after a disorderly Brexit

UK will need to have regulatory standards at least as high as present after Brexit.

Financial policy committee maintains counter-cyclical capital buffer at 1%.

Global financial vulnerabilities remain "material", exacerbated by trade tensions and corporate debt.

UK banks have enough capital to withstand trade war and disorderly Brexit.

Will probe whether illiquid investment funds should have longer redemption periods

Foreign investment inflows to UK commercial real estate and leveraged loans has fallen 60%-80% in Q1.

Will test UK banks' response to liquidity shock, does not plan to tighten liquidity requirements.

Will assess risks posed by cryptocurrency tokens to financial system.

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