Monday, 17 June 2013

UK: financial stability and foreign bank branches

Last Friday the Bank of England published Financial Stability Paper No. 22 - Which way do foreign branches sway? Evidence from the recent UK domestic credit cycle: see here (pdf). The report notes that lending to the UK economy by foreign branches has been more volatile than by UK-incorporated banks, UK-owned banks and foreign subsidiaries. Close monitoring of the risks posed by foreign branches with respect to financial stability is recommended, as is the need for the Bank of England’s Financial Policy Committee to monitor closely the growth in domestic lending not only in aggregate but also by different types of banks and to different sectors of the economy.

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