The Bank of England has set out a framework for what will become one of the most important parts of its work to prevent another financial crisis – a yearly stress test of the UK’s biggest banks.
In a move to enhance the stability of the financial system, the BoE on Tuesday published a discussion paper setting out proposals for annual tests to gauge whether the UK’s most important lenders have enough high-quality capital to withstand a bout of market turmoil.
The BoE, which will take comments on the paper until January, expects to introduce the tests in full before the end of Mark Carney’s term as governor in five years’ time.
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