BoE's Financial Stability Report: Economic outlook has improved, but risks to the recovery remain


The Bank of England (BoE) released its semi-annual Financial Stability Report this Tuesday and below are some of the key highlights:

  • FPC expects to maintain the UK CCYB rate at 0% at least until December 2021.
  • The pace of return to a standard UK CCYB rate in the region of 2% will depend on the bank's ability to rebuild capital while continuing to support UK households and businesses.
  • The economic outlook has improved, but risks to the recovery remain, especially those related to the spread of COVID.
  • Risky asset prices have continued to increase and in some markets, asset valuations appear higher relative to where they have been in the past.
  • Asset valuations may also reflect a search for yield in a low-interest rate environment and higher risk-taking.
  • Market-based finance needs to be more resilient and not amplify shocks.
  • FPC expects banks to use all elements of their capital buffers as necessary to support the economy through the recovery.
  • The increase in risk-taking has also manifested in the price volatility of certain crypto-assets.
  • There are some signs of growing interest in crypto-assets and related services from institutional investors, banks and key payment system operators.

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