Juliette Healey: Resilience of the UK financial system is stronger

The City of London skyline at dusk Photo: Jonathan Brady/PA Wire

Twice a year the Bank of England publishes a major review of what we call the '˜financial stability' of the nation.

Our aim is to ensure that the financial system is as robust as it can be to withstand whatever shocks could head its way.

That’s important for all of us – households and businesses – here in Yorkshire & Humber who rely on the services provided by banks, building societies and other financial institutions.

In my role as agent, I took our chief economist, Andy Haldane, to Sheffield and Bradford recently and we talked with businesses and a group of community services and charities about the challenges the people they work with face, including the impact from possible increases in the cost of borrowing.

BoE aiming to ensure the financial system is as robust as possible

To be clear, the Financial Stability Report isn’t a series of warnings about what the Bank thinks is likely to happen.

Instead the Financial Policy Committee, which writes the report, is concerned about so-called ‘tail risks’ – or worst-possible scenarios.

The latest report assesses possible risks from a wide variety of sources both at home and abroad.

And overall the picture is an encouraging one: over the past eight years the resilience of the UK financial system has been significantly increased.

For example, losses that would have wiped out the UK banking system in 2006 could now be absorbed relatively easily. But the job is never done and new risks are always emerging. So the Financial Policy Committee is always alert to the dangers lurking around the corner.

And, in spite of a relatively stable risk-environment overall, there are pockets of concern.

We’ve seen in the past how the housing market can quickly create problems for the wider economy.