PRA and FCA propose new captive insurance regime to drive UK growth and competitiveness
Innovative new proposals aim to establish the UK as a centre for the fast-growing captive insurance market.
Financial institutions
Tariffs, production networks, and spillovers: the case of a US-China trade war
We study the short-run macroeconomic transmission of a US–China tariff war in an open economy multi-sector New Keynesian model with input–output linkages, sectoral nominal rigidities, and heterogeneous currency invoicing. A reciprocal 10 percentage-point tariff increase generates asymmetric incidence: the tariff-imposing country bears more of the inflationary burden, while the targeted country experiences the larger output contraction. Production networks amplify this contraction by propagating the shock beyond the directly tariffed bilateral margin.
Tariffs, production networks, and spillovers: the case of a US-China trade war
We study the short-run macroeconomic transmission of a US–China tariff war in an open economy multi-sector New Keynesian model with input–output linkages, sectoral nominal rigidities, and heterogeneous currency invoicing. A reciprocal 10 percentage-point tariff increase generates asymmetric incidence: the tariff-imposing country bears more of the inflationary burden, while the targeted country experiences the larger output contraction. Production networks amplify this contraction by propagating the shock beyond the directly tariffed bilateral margin.
Minutes of the Money Market Committee meeting – June 2026
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
UK financial regulators to begin overseeing Critical Third Parties announced by HM Treasury
The Bank of England, the Prudential Regulation Authority and the Financial Conduct Authority will start overseeing the first Critical Third Parties on Monday 13 July 2026, following designation by HM Treasury.
A theory of bank liquidity requirements
We develop a general equilibrium theory of financial intermediation and its implications for liquidity regulation. The model is built around an agency problem arising from leveraged intermediation: banks finance loan origination with deposits and face moral hazard in risk management, while holding cash mitigates these incentives at the cost of foregone investment returns. Liquidity demand therefore emerges endogenously from incentive considerations rather than from exposure to exogenous funding shocks.
Minutes of the UK Money Markets Code Sub-Committee – June 2026
The Money Markets Committee is a forum for market participants and authorities to discuss the UK unsecured deposits and funding market and securities lending and repo markets.
Letter from the Governor to Joe Powell MP
Letter from the Governor
IFDP Paper: Multi-Plant Firms, Variable Capacity Utilization, and the Aggregate Hours Elasticity
Domenico Ferraro, Giuseppe Fiori, and Damian PierriWe develop a business cycle model with perfectly competitive product and labor markets in which production requires a minimum labor input, generating endogenous capacity utilization. The aggregate production function is kinked, featuring constant returns to scale below capacity—typically in recessions—and decreasing returns at capacity in expansions.
Statistical Notice 2026/07 - Bank of England Levy: Notification Document Levy Year 2026/27
Statistical Notices update the definitions and guidance contained in the Banking Statistics Yellow Folder
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