London: The Bank of England on Tuesday eased commercial banks' capital requirements in order to boost lending, as it warned that risks to financial stability "have begun to crystallise" following Brexit.
The move will boost lending to British households and businesses by up to 150 billion ($199 billion, 179 billion euros) -- and reduce banks' regulatory capital buffers by 5.7 billion, the BoE announced. The central bank added that British commercial banks had raised more than 130 billion of capital over the last eight years following the global financial crisis.
BoE governor Mark Carney vowed that the central bank would take "whatever action is needed" to aid monetary and fiscal stability in the wake of the June 23 referendum that saw Britain vote to exit the EU.
Major risks outlined Tuesday by the BoE's Financial Policy Committee (FPC) included fragile financial markets, subdued global economic growth and high household debt. "There is evidence that some risks have begun to crystallise," the FPC said in an update after Britain last month voted to exit the European Union.
"The current outlook for UK financial stability is challenging," it added in a bi-annual report.The FPC update was published after Britain last month voted to leave the 28-nation EU bloc in a shock referendum result that has sparked political turmoil and sent the pound plunging.
"It will take time for the United Kingdom to establish new relationships with the European Union and the rest of the word," the Bank of England said Tuesday."Some market and economic volatility is to be expected as this process unfolds."
The report was published after Carney last week indicated that the BoE could cut its key interest rate to a new record-low level under 0.50 percent as early as this month -- while it may decide also to pump out more cash stimulus as a result of Brexit.
