LONDON (AA) – Britain’s central bank announced plans to boost credit by up to £150 billion ($197.1 billion) in a bid to temper risks to the economy following the Brexit vote.
Bank of England Governor Mark Carney said there was the “prospect of a material slowing of the economy” and that the measures would help major U.K banks relax lending rules.
In remarks made at a news conference Tuesday morning, Carney said: “This is a major change. It means that three-quarters of U.K. banks, accounting for 90 percent of the stock of U.K. lending, will immediately – immediately – have greater flexibility to supply credit to U.K. households and firms.”
His remarks came after the release of the Bank of England’s twice-yearly financial stability report, which said there was evidence that some post-Brexit risks had begun to “crystallize”.
The current outlook for U.K.’s financial stability is challenging, the report said.
The announcement means U.K. banks must now stop building up a “rainy-day buffer” and instead release £5.7 billion ($7.49 billion) in funds until June 2017.
The bank said this translated into £150 billion ($197.1 billion) for lending to British households and businesses in the wider economy.
Pound sterling plunged and banking shares suffered significant losses following the June 23 referendum in which British voters chose by a 52 versus 48 percent margin to leave the European Union.
The Bank of England is expected to unveil further post-Brexit measures, including a possible reduction of interest rates to zero, in the coming weeks.
