Bank of England Outlines Extent of Powers to Supplement Capital Requirements

The interim Financial Policy Committee of the Bank of England has published a draft policy statement on the extent of its powers to give directions to set additional capital requirements in order to support financial stability. The FPC is slated to have two types of powers in this regard - the countercyclical capital buffer, which will supplement headline capital requirements, and sectoral capital requirements, which will apply to exposures in specific sectors.

The draft emphasizes that the exercise of the prudential powers must not have a significant adverse effect on the ability of the financial sector to contribute to the growth of the UK economy "in the medium or long term."