- At its meeting on 13 May, the Financial Policy Committee (FPC) reviewed the responses to its January 2016 consultation paper on the systemic risk buffer (SRB) framework.
- Having reflected on those responses, the Committee decided to adopt as final a framework that was broadly the same as that on which it had consulted
- The only addition was the FPC agreed to supplement the SRB framework with the following Recommendation to the Prudential Regulation Authority (PRA):
The FPC recommends to the PRA that it should seek to ensure that, where systemic buffers apply at different levels of consolidation, there is sufficient capital within the consolidated group, and distributed appropriately across it, to address both global systemic risks and domestic systemic risks.
The aim of the Recommendation was to ensure that sufficient capital was held within, and distributed appropriately across, consolidated groups to address both global and domestic systemic risks, which was an issue that had been highlighted in a number of the consultation responses.
- The Committee considered other issues raised in consultation responses. It discussed the relative merits of a set of alternative proposals to address them. When taken with the Recommendation above, the FPC was content to adopt the elements of the framework set out in the consultation paper.
- The final SRB framework agreed by the Committee on 13 May would be laid out in detail in a separate published document, The Financial Policy Committee’s framework for the systemic risk buffer.