The Financial Plumbing Committee: from Plumbing to Policy - - PowerPoint PPT Presentation

Elisabeth Stheeman External member of the Financial Policy Committee

The Financial “Plumbing” Committee: from Plumbing to Policy

Alex Brazier

Executive Director, Financial Stability Strategy and Risk

Christopher Woolard

Interim Chief Executive Officer, Financial Conduct Authority

Anil Kashyap

External member

Don Kohn

External member

Elisabeth Stheeman

External member

Jonathan Hall

External member

Sir Jon Cunliffe

Deputy Governor, Financial Stability

Sir Dave Ramsden

Deputy Governor, Markets & Banking

Ben Broadbent

Deputy Governor, Monetary Policy

Andrew Bailey

Governor, Bank of England

Sam Woods

Deputy Governor, Prudential Regulation, Chief Executive Officer

• f the PRA

Charles Roxburgh

HMT non‐voting member, Financial Policy

The Financial Policy Committee

2

Dame Colette Bowe

External member

Figure 1: Aggregate capital of major UK banks

Sources: PRA regulatory returns, published accounts, Bank analysis and calculations.

2 4 6 8 10 12 14 16 18 2007 8 9 10 11 12 13 14 15 16 17 18 19 2020 H1 CET1 capital ratio (per cent)

Operational risk and resilience

“Operational risk is the risk of disruption from systems and processes, from human errors and management failures and from external events and external actors.” “ Operational resilience on the other hand, is the ability of firms and the system as a whole to prevent, respond to, recover and learn from operational disruptions.”

Figure 2: Impact of operational resilience on the objectives of the authorities

Figure 2 illustrates the objectives which are most likely to be affected by operational resilience issues. It also illustrates that the consumer protection

• bjective is likely to be affected more often, and by more firms, than the market integrity, the safety and soundness, and financial stability objectives

Sources: Bank of England DP01/18

Figure 3: Sources of risk to the financial system

Sources: Bank of England Systemic Risk Surveys and Bank calculations

20 40 60 80 100

2008 2009 H2 2010 H2 2011 H2 2012 H2 2013 H2 2014 H2 2015 H2 2016 H2 2017 H2 2018 H2 2019 H2

Per cent mentioned by respondents UK political risk Cyber attack Geopolitical risk Risk of an overseas/global economic downturn Risk of financial market disruption/dislocation

Figure 4: Payment volumes (millions) 2008 to 2019

Sources: UK Finance

Figure 5: Proportion of total payments made in cash

Sources: UK Finance, Riksbank

0% 10% 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

Figure 6: Overview of a payments chain and the limits of current regulation

Source: December 2019 Financial Stability Report

Questions?

Elisabeth Stheeman External member of the Financial Policy Committee