Key Elements of the 2022 Stress Test

The Bank of England (Bank) is returning to the annual cyclical scenario (ACS) stress-test framework in 2022. This follows two years of Covid-19 pandemic crisis-related stress testing and its decision to postpone the test in March following Russia’s invasion of Ukraine. The Bank’s 2022 ACS will test the resilience of the UK banking system to deep simultaneous recessions in the UK and global economies, large falls in asset prices and higher global interest rates, and a separate stress of misconduct costs.

The Financial Policy Committee (FPC) and Prudential Regulation Committee (PRC) will use the test to assess bank balance sheets and the resilience of the UK banking system. By using stress tests to determine banks’ ability to withstand an adverse scenario, the Bank aims to ensure they are able to absorb rather than amplify shocks, and serve UK households and businesses.  

The stress is not a forecast of macroeconomic and financial conditions in the UK or abroad resulting from the current geopolitical situation and government responses to it. It is a severe but plausible scenario which assesses the resilience of the UK banks to a range of adverse economic shocks.

The results of the test will be published in summer 2023 and, along with other relevant information, will be used to help inform banks’ capital buffers (both the UK countercyclical capital buffer (CCyB) rate and Prudential Regulation Authority (PRA) buffers). 


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