The Bank of England's Financial Policy Committee (FPC) has backed plans to stress-test investment funds and asset managers to evaluate the UK's financial stability beyond the core banking sector.
In its latest Financial Stability Report, the committee, which is led by the Bank's governor Mark Carney (pictured), said the recent rapid growth in open-ended funds, and their continued investment in less liquid assets, has increased the risk of impairing overall market liquidity, which is already fragile. The FPC said it backs the Financial Stability Board's proposal in October to stress test asset management firms and investment funds providing credit to the financial system through holdings of corporate bonds, bank debt and government debt. BoE: 'System-wide' stress tests needed t...
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