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Written question asked by Lord Birt (Crossbench) on Wednesday, 9 December 2015, in the House of Lords. It was due for an answer on Wednesday, 23 December 2015. It was answered by Lord O'Neill of Gatley (Conservative) on Wednesday, 23 December 2015 on behalf of the Treasury.

Debts

Question

To ask Her Majesty’s Government, further to the Written Answer by Lord Deighton on 9 March (HL5261), whether they have identified a threshold level of private-sector or financial corporation debt that might "threaten financial stability", and if so, what that level is, and what steps they plan to take if it is reached.

Answer

As mentioned in the answer of 9 March, the Government does not set a specific target for private sector debt. However, the Financial Policy Committee (FPC), established as a policy committee of the Bank of England, is empowered to identify, assess, monitor and take action in relation to risks across the UK financial system. This includes risks which arise from beyond the core banking sector (such as private sector debt). The FPC actively monitors developments in the aggregate level of credit extended to UK households and private non-financial corporations, and has the macroprudential policy tools required to address any risk it identifies.


For example, the countercyclical buffer is a macroprudential instrument which is designed to protect the banking sector from periods of excess aggregate credit growth that can contribute to system-wide risk. The countercyclical buffer rate in the UK is currently set at 0%, and is reviewed on a quarterly basis.

Secondary information

Type
Written question
Reference
HL4388
Session
2015-16
Related items
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Monday, 1 February 2016
Written questions
House of Lords
Grouped for answer
Yes
Subjects
Debts Financial institutions Private sector
Contains statistics
Yes
Link
View this Written question on www.parliament.uk