What is one of the key functions of the Financial Policy Committee?

One of the key functions of the Financial Policy Committee is to remove systemic risks from the economy. The committee, established by the Bank of England, focuses on identifying, monitoring, and mitigating risks that could threaten the stability of the financial system. By addressing systemic risks, the committee aims to prevent potential financial crises that could arise from interconnected financial institutions or imbalances in the economy.

In carrying out this function, the committee uses a range of tools—such as macroprudential regulation—to enhance the resilience of the financial system. This proactive approach helps to ensure that financial institutions are better equipped to absorb shocks and that the overall economy remains stable.

This focus on systemic risk is crucial because it addresses the underlying vulnerabilities that can lead to broader economic disruptions. By working to maintain financial stability, the committee contributes to the protection of consumers and the overall economic well-being of the country.

The other options, while reflective of various financial system functions, do not pertain to the primary role of the Financial Policy Committee. For instance, lending money to the public and issuing currency are functions typically associated with central banks but are not responsibilities of the committee. Similarly, regulating foreign banks falls under other regulatory bodies rather than being a specific function of the Financial Policy Committee.