The Financial Policy Committee’s medium-term priorities (2026-2029)

Medium-term priority 

We will:

1. Enhance surveillance of financial stability risks, including in market-based finance, drawing on advancements in system-wide assessments, to support the financial system’s preparedness for shocks.

• strengthen the FPC’s analytical framework by:  

• taking an (even) more system-wide approach to risk assessment, with an emphasis on scenario analysis and identifying key interconnections across the financial system
• identifying risks to the FPC’s objectives more systematically and comprehensively, in a way that best supports comparison of those risks and policies to address them; 

• continue to progress work with international bodies, including the Financial Stability Board (FSB), on improving market surveillance and the implementation of reforms to strengthen resilience in the financial system; this includes FSB work on non-bank leverage and data and analysis of risks from private markets;

• design and run the next System-Wide Exploratory Scenario (SWES) exercises and embed these exercises in how we assess systemic risk by: 

• working to ensure the private markets SWES in 2026/7 helps to assess potential systemic financial stability risks arising from the growing role of private markets in the UK’s financial system. 
• ensuring the focus of future exercises is informed by our macro analysis of how the provision of vital services will have evolved and what potential systemic risks would best be explored by a system-wide exploratory exercise; 

• further improve system-wide analysis in, and resilience of, market-based finance, including through:  

• ensuring we are making the best use of data available to us and closing gaps where possible 
• taking into account interlinkages with the banking system, and risks non-bank financial institutions could pose as the banking system and insurance sector continue to evolve
• continuing to build our monitoring toolkit to assess risks from leverage in the non-bank sector, including concentration risks, and implementing any FSB recommendations in the UK
• sharing information and aggregate analysis on risk taking to support better private sector risk management and readiness for shocks;

• continue to assess other vulnerabilities in core markets and work across authorities to ensure that the gilt and gilt repo markets are resilient in stress, including by:

• embedding the findings of the public markets focused SWES - through a toolkit and firm engagement - into how we assess systemic risks to core markets (‘desktop SWES’)
• after the Bank’s 2025 gilt repo market Discussion Paper, taking forward reforms to enhance gilt repo market resilience through ex ante measures to support liquidity provision in stress;

• continue to implement the Bank’s updated approach to stress testing the banking system and progress work to join the dots between different stress testing exercises across banks, insurers, central counterparties (CCPs), and SWESs to improve our understanding of system-wide dynamics. 

2. Identify, assess and respond to structural changes, and emerging risks including from technological innovations, geopolitical developments and risks to operational resilience.

• support the financial system in the responsible adoption of artificial intelligence (AI), to harness the opportunities that it can offer; monitor and assess the broader risks to financial stability from the investment in and adoption of AI, via the impact on the financial system and the real economy;  
• support productive and responsible innovation in digital assets; monitor the interactions between stablecoins, systemic payments stablecoins and other tokenised assets, as well as their interactions with the traditional financial system – in the UK and globally; continue to assess systemic risks and take action to manage these where they arise;
• assess, identify and mitigate risks associated with geopolitical tensions and global fragmentation; and
• continue to develop the FPC’s framework for assessing the key channels through which operational risks could affect financial stability and vital services that support the real economy; deepen understanding of the sources of operational risk to the provision of vital services and how these risks can be reduced; this will consider systemic risks from critical third parties (CTPs), and the rise of new technologies;
• Contribute to help ensure the findings of cyber and operational resilience stress tests are utilised, enhance firms’ response and recovery capabilities and understanding of the impact of their services on the broader financial system and, through this, support the real economy;
• continue to monitor the financial stability implications of climate change, including physical risks and risks from the transition to net zero; incorporate, where appropriate, climate risks into the Bank’s stress testing frameworks;
• continue to build our approach to, and our analytical and research capabilities, to support understanding of new and evolving risks and opportunities. 

3. Deepen focus on vital services provided by the financial system and support opportunities to enable economic growth, including by ensuring existing macroprudential policy is working as intended.  

• establish a coherent approach to ‘mapping’ the financial system, tracing how shocks affect vital services and propagate to the real economy, to support the ranking and prioritisation of risks to financial stability;
•  conduct analysis to identify areas where the financial sector could better support real economy activity in terms of the vital services that the sector provides and ensure that existing macroprudential tools are working as intended, including by monitoring the impact of the FPC’s housing tool and the leverage ratio framework;
• assess barriers to the supply of finance with a focus on high-potential small and medium-sized enterprises (SMEs) and work with other authorities to address identified frictions in the financial sector;
• consider whether parts of the bank capital framework might warrant adjustment to make it more effective, efficient and proportionate in future, and to address any unintended consequences – this includes: 

• working with the PRA and international authorities to enhance further the usability of regulatory buffers
• reviewing the implementation of the leverage ratio in the UK
• supporting initiatives by the Bank to respond to feedback on interactions, proportionality and complexity in the capital framework