BoE’s FPC calls on banks to raise more capital despite drop in lending
The Bank of England's (BoE) Financial Policy Committee (FPC) today said banks will have to make up a capital shortfall estimated at £25 billion ($37.8 billion) by the end of the year, but stressed they should not achieve this by cutting lending.
The announcement caused immediate controversy, with the government's business secretary, Vince Cable, denouncing the recommendations as "pro-cyclical" – only to be contradicted by BoE governor Mervyn King, who said better capitalised banks would in fact
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