Bank of England refines resolution regime for responsiveness and growth
David Ramsden, Deputy Governor for Markets at the Bank of England, outlined how the UK's bank resolution regime is evolving to be more responsive and proportionate. Speaking at King's College London on January 14, 2026, he emphasized its role in supporting sustainable growth and financial stability, drawing lessons from the 2023 failures of SVB UK and Credit Suisse.
Resolution adapts to new financial realities
David Ramsden highlighted the Bank of England's evolving approach to resolution, emphasizing responsiveness alongside credibility, feasibility, and effectiveness.
This shift follows lessons from the 2023 failures of Silicon Valley Bank UK and Credit Suisse, where public funds were not exposed, and contagion was avoided.
The experience underscored the need for inherent flexibility in resolution playbooks.
Ramsden stressed that responsiveness now extends beyond traditional banks to the wider financial system, acknowledging increased financial stability risks in 2025 from geopolitical tensions, market fragmentation, and sovereign debt pressures.
He noted that prevention is as crucial as the cure, integrating broader responsibilities as a member of the FPC and PRC.
Balancing resilience and capital costs
Resolution supports financial stability by absorbing shocks, not amplifying them.
The Global Financial Crisis highlighted the need for greater ex-ante resilience, a gap now addressed by the UK's credible resolution regime.
This regime reduces both the probability and economic costs of financial crises, allowing for lower bank capital requirements.
The FPC's December 2025 assessment reduced the Tier 1 capital benchmark by one percentage point to 13% of Risk Weighted Assets.
Crucially, the resolution framework is judged to reduce the appropriate level of Tier 1 capital requirements by about five percentage points, fostering market discipline and reducing reliance on public funds.
Proportionality in practice
The Bank of England's recent policy measures demonstrate a pragmatic evolution, tailoring resolution requirements to firm size and complexity.
By increasing the asset threshold for resolution planning and removing MREL for transfer firms, the regime reduces compliance burdens for smaller institutions.
This proportionate approach, coupled with a new recapitalisation tool, enhances flexibility without increasing risks to public funds, ensuring a more efficient and adaptable financial safety net.