Investing.com – The Bank of England (BoE) decided on Tuesday to reduce capital buffers that British banks are required to maintain in order to increase the flow of credit during the period of uncertainty caused the U.K.’s decision to leave the European Union (EU), known as a Brexit.
The BoE’s Financial Stability Report released on Tuesday pointed out that the outlook was “challenging” and asserted that “there will be a period of uncertainty and adjustment following the result of the referendum.”
To ensure the flow of credit, the Financial Policy Committee (FPC) decided to reduce the U.K. countercyclical capital buffer rate from 0.5% to 0% of bank’s U.K. exposures with immediate effect until at least June 2017.
According to the FPC, the action will “reduce regulatory capital buffers by £5.7 billion ($7.5 billion), raising banks’ capacity for lending to UK households and businesses by up to £150 billion ($197 billion).”
BoE governor Mark Carney will hold a press conference at 10:00 AM GMT, or 6:00AM ET.