Confidence in the UK financial system has fallen to a post-crash low as cross asset volatility has also fallen to a multi-year low point.
The number of executives who believe the probability of a ‘high impact’ event was ‘low or very low’ rose 9% to 64% over the first half, according to the Bank of England’s bi-annual Systemic Risk Survey.
Almost half or 46% believed the likelihood of a economic major disruption had fallen, with only 6% believing it had increased over the last six months.
Against a backdrop of volatility at multi-year lows, not just in equity but also within fixed income and FX markets, the sanguine view from the City could be interpreted as complacency, however.
‘Confidence in the UK financial system has risen slightly since the October 2013 survey,’ wrote the Bank of England. 24% (+5 percentage points) of respondents are completely confident or very confident in the stability of the UK financial system as a whole over the next three years and 69% fairly confident (-8 percentage points).
‘But there has been a slight increase in the proportion of respondents who were not very confident (+3 percentage points to 7%).’