Governor statement to Treasury Select Committee, on behalf of the FPC, MPC and PRC

Bank of England statement 
Published on 03 March 2020

The front line of combatting the challenges of Covid-19 comprises the extraordinary efforts of NHS health professionals, the Public Health Officials and volunteers across the country, as well as the exceptional support by the FCO to UK citizens abroad. 

The Bank of England’s role is to help UK businesses and households manage through an economic shock that could prove large but will ultimately be temporary.

The Bank will take all necessary steps to support the UK economy and financial system, consistent with its statutory responsibilities.  

We are monitoring the situation closely across all our functions and ensuring all necessary contingency plans are in place:

  • The Monetary Policy Committee (MPC) is assessing the economic impacts and considering the policy implications of various possible scenarios, including the extent to which supply disruptions have aggregate demand consequences via cash flow, cost and availability of finance, as well as confidence effects;
  • The Financial Policy Committee (FPC) is examining macro-financial impacts including spillovers to market functioning and how to address any possible constraints on financing to UK businesses and households that might emerge;
  • The Prudential Regulation Committee (PRC) and our FMI supervisors are reviewing the contingency plans of banks, insurers and financial market infrastructure.  This includes assessments of operational risks and the ability of these firms to serve customers and markets with split teams and remote working;
  • Bank management is reviewing the Bank’s own operations and contingency plans to ensure that the Bank’s payments systems and Sterling Monetary Framework remain operational and resilient. The Bank’s Critical Incident Management Framework has been meeting for over a month to steer these efforts.  The Chair of Court, the Bank’s Board of Directors, has been briefed on the Bank’s contingency planning.

The FPC, MPC and PRC met jointly yesterday to review a range of macroeconomic and financial system scenarios and their implications, and they will continue to meet as needed and will act as appropriate.

Andrew Bailey and I are in continual contact on the whole range of issues consistent with our statutory duties and in order to ensure a smooth transition on 16 March.

The Chancellor and I have had a series of discussions, and Bank officials are in regular contact with their counterparts at HM Treasury and the FCA.

We are in frequent contact with our international peers, including at the G7, G20 and IMF. 

The Bank and its policy committees will provide further updates as required.

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