Sarah Breeden: Investing in financial stability

Speech by Ms Sarah Breeden, Executive Director for Financial Stability Strategy and Risk of the Bank of England, at the Insolvency Practitioners Association annual conference, London, 27 April 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Central bank speech  | 
02 May 2023


I suspect I won't need to convince this audience of the importance of corporate debt and financing conditions. What I'd like to do instead is explain why the Financial Policy Committee (FPC) cares about them.

The FPC has two objectives: a primary one to maintain financial stability, and a secondary one to support economic growth. The supply of finance to the corporate sector touches on both.

For our primary objective we look to ensure that risks to financial stability aren't generated by excessive levels of corporate debt – where indebtedness might build in an upswing and lead to a damaging credit crunch in a downturn.

And for our secondary objective we want to make sure the financial system is supplying enough long-term, stable funding to allow businesses to make productive investments, and finance major economic transitions such as the journey to net zero.

So, in both cases, stability is our watchword. We are aiming at a supply of business finance which is stable through the economic cycle – avoiding damaging swings from credit boom to bust. And we want to ensure the financial system provides the sort of funding – long-term and stable – which supports business investment.