What regulatory body did the Bank of England create in 2012?

The correct response identifies the Prudential Regulation Authority (PRA) as the regulatory body created by the Bank of England in 2012. This was a significant development in the UK financial regulatory landscape following the 2008 financial crisis, which exposed weaknesses in financial regulation.

The PRA was established to enhance the stability of the financial system by overseeing banks, building societies, insurance companies, and investment firms. Its primary objectives include promoting the safety and soundness of these institutions and ensuring that they operate in a manner that mitigates risks to the financial system as a whole. By focusing on the prudential regulation of financial institutions, the PRA plays a critical role in safeguarding the UK's financial infrastructure.

The other options represent entities or bodies that either do not exist or do not relate directly to the regulatory changes made in the UK in 2012. For example, the Financial Stability Authority is a misnomer, and while the Monetary Policy Committee exists as part of the Bank of England, it was not created in 2012 but has been operational since 1997. The Consumer Financial Protection Bureau is a regulatory agency in the United States, not the UK, and thus does not pertain to this question.