Bank of England Financial Policy Summary and Record of the Financial Policy Committee March 2020 Meetings
03/24/2020The Bank of England's Financial Policy Committee met on March 9 and 19, 2020, a time when the COVID-19 pandemic dominated the news and in turn presented challenges for markets.
In its record of the March 9, 2020 meeting, the Bank of England acknowledged that:
- by the time of the meeting, there were signs of global supply change constraints;
- major equity indices had reflected the market's concern relating to the virus; and
- bank funding costs had increased and credit default swap spreads had widened.
Therefore, the Bank of England acknowledged that "there was therefore a clear case for policies which would help the economy bridge through a period of disruption".
The Bank highlighted that it expected COVID-19 to "have less impact on the core banking system than recent stress tests run by the Bank have shown the system can withstand". However, as part of its response to the COVID-19 pandemic and its effects on the market, the Financial Policy Committee decided to reduce the Counter-Cyclical Capital Buffer Rate to 0% with immediate effect.
To alleviate the pressure on major banks resources during the pandemic, at the meeting of March 19, 2020, the FPC (together with the PRC) cancelled the 2020 annual stress tests for banks.
Further, the FPC welcomed the joint "Covid Corporate Financing Facility", which provides financial assistance to firms during the COVID-19 pandemic. The scheme entails the purchasing of commercial paper, of up to one year's maturity, from eligible businesses.
View the Record of the Financial Policy Summary and Record.
View the Covid Corporate Financing Facility Notice.
Details of other regulatory responses to COVID-19 are available on our COVID-19 Research Center.
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