LONDON: The Bank of England (BoE) said it considered this month increasing the amount of money banks must set aside to counter their lending risks as Britain’s economy grows but held off on taking a decision until June.
The BoE said on Tuesday its Financial Policy Committee, which oversees risks to the economy from the banking system, had seen arguments for setting the so-called countercyclical capital buffer (CCyB) a little above its current 1 per cent level.
“Risks had increased since the Committee first judged that a 1 per cent UK CCyB rate was appropriate, in Q1 2016,” the BoE said in a series of minutes from the FPC’s meeting on March 12.
The FPC had to be forward-looking and “waiting for a more marked evolution in domestic risks before acting could result in a need to consider sharper adjustments to the UK CcyB rate, which would likely carry larger economic costs,” the minutes said.
A “measured increase” in the first quarter of 2018 could be accommodated by banks without a need to tighten credit conditions and would not have been a shock, they said. — Reuters
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