The Bank of England (BoE) has announced it is cancelling its 2020 stress test for the eight major banks and buildings in the UK.
The bank’s decision is intended to help lenders instead focus on meeting the needs of UK households and businesses via the continuing provision of credit during the coronavirus pandemic.
The stress test, or the annual cyclical scenario (ACS), is a simulation carried out by the BoE designed to determine its ability to deal with an economic crisis.
The announcement to cancel this year’s ACS is part of several measures the BoE and Prudential Regulation Authority have announced, aimed at providing flexibility to help firms and financial market infrastructures maintain their safety and deliver the critical functions they provide to the economy.
The recent 2019 stress test showed that the UK banking system was “resilient” to deep simultaneous recessions in the UK, as well as global economies that are more severe overall than the global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs.
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