Mark Carney and FPC on financial stability – highlights

Mark Carney and FPC on financial stability – highlights

“It should be recognised that by taking these steps, by the FPC doing its job and reinforcing financial stability in the UK, we maintain if not enhance the conditions under which the MPC can continue to do its job and provide, in its judgement at present, to provide extraordinary monetary policy stimulus to the benefit of the entire UK economy.”

ON MPC GUIDANCE

“The FPC welcomed these changes to the FLS. The MPC has judged that they will have no material impact on the stance of monetary policy and noted that they do not affect the MPC’s policy guidance.”

ON HOUSE PRICES

“We did not see an immediate threat coming from the housing market but we are concerned about the perspective evolution of that market in the absence of some of these changes.”

“The concern is where this could go. We definitely see some short-term momentum. We are prepared to take larger measures later if that becomes necessary.”

ON INTEREST RATES BEING BLUNT TOOL

“We all have been around long enough, and I have lived through one of these housing boom-busts when I previously lived in the UK, to know the damage that can be done if unchecked and also to know, the experience of the US, the experience of other jurisdictions, that one can have price stability but building risk to financial stability existing in parallel and the really blunt tool for addressing financial stability issues is monetary policy.”

ON FLS AS A BACKSTOP

“There has been a marked improvement as you know in funding for banks and building societies, such that it’s become more of a backstop than an actively-used funding scheme or core part of a bank’s funding.”

“We do not expect a material change in funding conditions for banks.”

ON TOOLBOX (in opening statement)

“The FPC has identified a range of tools that it could deploy in future, should that be necessary. These tools include recommendations on underwriting standards, the Help to Buy scheme and the availability of higher-risk loans, as well as recommendations or directions on bank capital requirements.

ON VARYING AFFORDABILITY CRITERIA (in opening statement)

“The FPC is also acting today to create a new macroprudential tool – the ability to vary the affordability criteria that mortgage borrowers must meet. This will help ensure that underwriting standards don’t slip and that borrowers can afford to service their mortgages if conditions change more than they expect.”

BAILEY ON RBS

“There must be a serious investigation of these very serious allegations. I would hope though that that does not dominate the other thing, which is serious investigation of what I might call the supply capacity and the mechanics of lending to small and medium-sized firms, because that seems to me absolutely crucial.”

HALDANE ON RBS

“The RBS story is a story of inadequate processes, people and information.”

BAILEY ON CO-OP RESTRUCTURING

“That in my view was an essential thing to do because the board did not look nearly strong enough. The (appointment) process today is very different in terms of how it operates.”

“Frankly the bar to get someone out once they’ve been approved is higher than it is to get them in. The process that the new regulators use involves a lot more senior level involvement…that didn’t happen in 2009. What we actually did was to require the board to be restructured.”

BAILEY ON PROJECT VERDE

“I can’t talk about what other people did, because I don’t know the whole story frankly, that’s a very good reason why there’s going to be a review and an inquiry.”

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