At its meeting on 1 July, following its discussion on 28 June, the Financial Policy Committee:
- Reduced the UK countercyclical capital buffer rate from 0.5% to 0% of banks’ UK exposures with immediate effect.
- Recommended to the Prudential Regulation Authority (PRA) that, where existing PRA supervisory buffers of PRA-regulated firms reflect risks that would be captured by a UK countercyclical capital buffer rate, it reduce those buffers, as far as possible and as soon as practicable, by an amount of capital which is equivalent to the effect of a UK countercyclical capital buffer rate of 0.5%.
- Welcomed the Bank of England’s announcement that it will continue to offer indexed long-term repo operations on a weekly basis until end-September 2016. This is a precautionary step to provide additional flexibility in the Bank’s provision of liquidity insurance, further reinforcing the ability of firms to draw on their own liquidity buffers.
- Supported the position of the PRA to allow insurance companies to use flexibility in Solvency II regulations to recalculate transitional measures. These measures smooth the impact of those new regulations.