BoE’s crisis lending plan hits buffers
Scepticism greets regulator’s proposal to increase releasable leverage capital buffers
The Bank of England thinks it’s found a way to get UK lenders to keep credit flowing in a crisis.
A plan released for consultation on July 7 would make more of the capital buffers banks hold on top of required minimums ‘releasable’, meaning they can be lowered to 0% at the regulator’s discretion, freeing up capacity to lend and invest.
Critics say the idea is appealing on paper, but fraught in practice.
“This whole buffer concept is problematic, and to me reflects an overly academic approach to
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