Bank of England cancels 2020 stress tests in response to Covid-19
Says move will allow sector to focus on lending during crisis
The Bank of England said it had cancelled its annual stress tests for major banks to help them focus on lending during the coronavirus crisis.
The test is designed to see how the banking system would hold up in the event of a major shock and was implemented after the 2008 financial shock caused by misconduct in merchant banking.
The BoE said the cancellation was "intended to help lenders focus on meeting the needs of UK households and businesses via the continuing provision of credit".
"This is in line with (previous) measures, which included a decision...to reduce the UK countercyclical buffer rate to 0% of banks’ exposures to UK borrowers with immediate effect," the bank said in a statement on Friday.
"The Financial Policy Committee and the Prudential Regulation Committee expect that all elements of banks’ capital and liquidity buffers can be drawn down as necessary to support the economy through this temporary shock."
The BoE said the 2019 stress test showed the UK banking system was resilient to deep simultaneous recessions in the UK and global economies that are more severe overall than the (2008) global financial crisis, combined with large falls in asset prices and a separate stress of misconduct costs.