Finance
BoE's Bailey sees 'urgent need' to boost resilience of market-based finance
Published by Global Banking & Finance Review®
Posted on January 27, 2026
2 min readLast updated: January 27, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on January 27, 2026
2 min readLast updated: January 27, 2026
BoE's Andrew Bailey highlights the urgent need to strengthen market-based finance resilience against economic shocks, focusing on global stability.
LONDON, Jan 27 (Reuters) - Bank of England Governor Andrew Bailey said he sees "a particular and urgent need" to strengthen the global resilience of market-based finance such as private credit against economic shocks.
"The sector is very large and fast-growing. It is disparate in nature and opaque in important places, meaning that the international interlinkages are, perhaps unsurprisingly, complex and hard to observe," he wrote in an article published on Tuesday by The Banker, an industry magazine.
In December, the BoE launched what it calls a stress test of the private equity and private credit industries, which will report back early next year.
The focus of the test is on broader impacts on the economy rather than the health of specific firms - most of which the BoE does not directly regulate, unlike banks.
Bailey also repeated his view that there was "no trade-off between stability and growth".
"Just because the banking system is in a far more resilient position now than in the past is no reason to rest on our laurels. The challenge now lies in managing risks that sit beyond the banking perimeter as well as identifying and understanding new interconnections between banks and non-banks," he wrote.
Last year, finance minister Rachel Reeves described regulation as a "boot on the neck" of British businesses, and President Donald Trump's administration is also considering relaxing capital rules for banks.
The BoE lowered some of its capital requirements for banks for the first time since the global financial crisis in December, which it justified on the basis that other rules were now tougher and that British banks were smaller global players.
(Reporting by David Milliken, Editing by Paul Sandle)
Market-based finance refers to financial services and products that are provided outside traditional banking systems, including private credit and equity, which are essential for funding and investment.
A stress test is a simulation used to determine the ability of financial institutions to withstand economic shocks, assessing their resilience against adverse market conditions.
Financial stability refers to a condition where the financial system operates effectively, maintaining confidence in the financial markets and preventing systemic crises.
Private equity is a form of investment where funds are directly invested into private companies or public companies that are taken private, aiming for long-term capital appreciation.
A regulatory framework consists of laws, regulations, and guidelines that govern financial institutions and markets to ensure stability, transparency, and protection for investors.
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