Meeting minutes – August 2021
Updated 6 October 2023
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Record of the meeting between the Governor of the Bank of England and the Chancellor of the Exchequer to discuss the Financial Stability Report (published on 13 July 2021).
1) On 2 August 2021, the Governor and Chancellor discussed the July 2021 Financial Stability Report.
2) The Chancellor and the Governor discussed the interim results of the 2021 solvency stress test (SST). As set out in the report, the 2021 SST assesses the resilience of the UK banking system to a very severe macroeconomic stress. The Governor explained that the interim results were encouraging, and supported the Financial Policy Committee’s (FPC) judgement that banks can lend to households and businesses, even in very challenging scenarios, and the Prudential Regulation Committee’s (PRC) decision to remove extraordinary guardrails on shareholder distributions that were put in place at the start of the pandemic.
3) The Chancellor and the Governor also discussed the FPC’s judgement that UK corporate debt vulnerabilities have increased modestly. The increase in indebtedness had not been large in aggregate but had been more substantial in some sectors and among small and medium-sized enterprises (SMEs).
4) The Governor and Chancellor discussed the FPC’s analysis on market-based finance, and the international work to build up its resilience. The Governor then summarised the FPC’s analysis of potential financial stability risks posed by cloud service providers.