Deloitte comments on the Bank of England’s Financial Stability Report has been saved
Deloitte comments on the Bank of England’s Financial Stability Report
11 July 2019
Commenting on the Bank of England’s Financial Stability Report, published today, David Strachan, Head of Deloitte’s EMEA Centre for Regulatory Strategy said:
Progress on the transition away from LIBOR
“The Financial Policy Committee's (FPC’s) tone is tougher, signalling a growing frustration with firms that continue to increase their LIBOR exposures with maturities beyond 2021, along with the slow pace of transition overall. Given that low client awareness and corresponding responsiveness to adoption has been cited by firms as a key obstacle to progress in this area, regulators may need to look at how they can support firms’ efforts to encourage clients to transition.”
Pilot cyber stress testing exercise
“In addition to informing the FPC’s understanding of cyber threats, these tests should also help those banks that participate to improve their understanding of how to address weaknesses in their critical payments systems and make them more robust for when things do not go to plan.”
Exploring the implications of a severe and broad-based liquidity stress
“Many of the technological and business model disruptions to the financial services industry that are being championed for the benefits they bring, could also have fundamental implications for liquidity management. This stress test will help the Bank of England develop its understanding of the role it needs to play to ensure there is sufficient liquidity in the system.”
Exploring resilience to the physical and transition risks of climate change
“Banks will need to make some very significant advances in data collection and in their understanding and management of climate change risks, in order to be ready for the 2021 exploratory scenario. For many, this will require them to develop a wholly-new risk discipline.”
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