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Home > Research > Financial Stability Themes

Financial Stability Themes

Financial stability is fundamentally concerned with maintaining a stable provision of financial services to the wider economy - payments services, credit supply, and insurance against risk. A strong and resilient banking system is the foundation of financial stability, as banks are at the centre of the credit intermediation process between savers and investors. Moreover, banks provide critical services to consumers, small and medium-sized enterprises, large firms and governments who rely on them to conduct their daily business, both at a domestic and international level. But the structure of financial markets is also an important component to ensuring a safe and resilient financial system.

Following the recent financial crisis, the financial regulatory framework in the United Kingdom is undergoing a major transformation. A key part of the reform is the creation of the Financial Policy Committee (FPC) within the Bank of England to conduct the country’s macroprudential policy. The primary objective of the FPC is the identification, monitoring of, and taking action to remove or reduce systemic risks with a view to protecting and enhancing the resilience of the UK financial system. The secondary objective of the FPC is, subject to achieving the primary objective, to support the economic policies of the government, including those for growth and employment.

With macroprudential policy relatively untested in most developed countries, research is central to enhancing policymakers’ understanding of the key issues and questions in this area. In support of these new responsibilities, the Bank's research interests can currently be grouped into four themes: