FINANCIAL SYSTEM AND

KEY ISSUES IN UK
 The financial industry in the UK is systemic,
open, and sophisticated on a worldwide scale.

The Financial
Thanks to post-GFC reforms, a proactive
macroprudential approach, and an efficient
multifaceted reaction to protect financial
s t a b i l i t y, i t h a s s u c c e s s f u l l y w e a t h e r e d t h e

system in the UK
COVID-19 epidemic. As the U.K., EU, and
financial industry work together to prevent
u n f a v o u r a b l e e f f e c t s o n f i n a n c i a l s t a b i l i t y,
Brexit uncertainty is being managed
e f f e c t i v e l y.
Brexit uncertainty is being managed effectively. The pandemic's endgame and the
financial system's exact impact after support measures finish are both still
unknown. Therefore, three important factors are currently influencing the
financial stability conditions in the United Kingdom:
DEFINITIONS OF
KEY OF
FINANCIAL
INTERMEDIARIES
ROLE
types

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BANKS

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NO BANKS
The developing relationship between
the United Kingdom and the EU
regarding financial services; ensuring A strong framework for financial
a sustainable and robust post- stability benefits the U.K. financial
pandemic economic recovery; and system
successfully managing ongoing
financial crises.
The FSAP team has determined that the core banks and
insurers' capital and liquidity levels are strong—even in
the face of certain extremely unfavourable scenarios, such
as the resurgence of the epidemic and a tighter monetary
policy stance. Effective interagency cooperation is the
foundation of the institutional framework for financial
stability. The crucial market infrastructures around the
world are still in good shape, and the regulators have
taken the lead in the global LIBOR changeover
FSAP:The Financial Sector Assessment Program is a
comprehensive and in-depth analysis of a country's
financial sector. It is a crucial part of the Fund's
financial surveillance and an input to the Article IV
consultations.
KEY Financial intermediaire
Financial interconnection may open up new
avenues for market interactions and spread; (iv)
liquidity imbalances in globally engaged NBFIs may
become apparent; and (v) post-Brexit operating
models for international banks and financial
institutions may emerge. These present a
challenge to the agencies in charge of financial
stability, whether taken together or separately.
The FSAP has suggested four future directions
while fully acknowledging the strengths: I
improving systemic risk management; (ii) stepping
up regulation and supervision; (iii) lowering the
risk of transitions and future crises; and (iv)
securing institutional safeguards for financial
stability and market integrity. Some of the FSAP
suggestions call for the active participation of
international central banks, financial stability
agencies, and regulators.
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