BoE's Financial Policy Committee publishes July 2026 financial stability report

The Bank of England's (BoE) Financial Policy Committee (FPC) has published its July financial stability report alongside the record of its 26 June meeting. The FPC meets to identify risks to financial stability and agree policy actions aimed at safeguarding the resilience of the UK financial system.

Key topics covered include:

• Markets: Vulnerabilities in risky asset valuations, sovereign debt markets and risky credit markets, including private credit, remain and some have become more pronounced since the December 2025 financial stability report. Notably, there has been a substantial increase in the use of leverage in equity markets.
• AI-related risks: The FPC examined the macro financial risks arising from the AI transition across a range of sectors. It also notes that recent rapid advances in frontier AI capabilities have increased financial stability risks related to cyber and operational resilience.
• Countercyclical capital buffer (CCyB): The FPC maintained the UK CCyB rate at its neutral setting of 2%.
• Private markets: The FPC welcomed the BoE's publication of the stress scenario for the private markets system wide explanatory scenario (SWES). The FPC expects to use the SWES to improve its understanding of how banks and non-banks active in private markets would respond to a severe but plausible global downturn.
• Bank capital reform: Following its review of bank capital requirements, the FPC announced that it will work with the UK Prudential Regulation Authority (PRA) to modernise the capital framework. The proposed reforms aim to improve the usability of capital buffers and make leverage ratio requirements more proportionate and effective while maintaining overall financial system resilience. For more on this, please see the Prudential Regulation section.
• Stablecoins and money market funds (MMFs): The FPC welcomed the BoE's policy statement and consultation on the draft code of practice for systemic sterling-denominated stablecoins and recent statements by HM Treasury and the UK Financial Conduct Authority on their plans to strengthen the resilience of MMFs.

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