The Bank of England (BoE) announced a new measure on Tuesday to soften the financial fallout from the U.K.'s vote to leave the European Union (EU) last month.
The counter cyclical capital buffer rate for U.K. banks was cut with immediate effect to 0 percent from 0.5 percent of financials' U.K. exposure, the BoE said on Tuesday in its biannual Financial Stability Report — the first to be published since the Brexit vote. This will reduce regulatory capital buffers by £5.7 billion ($7.5 billion), raising banks' capacity to lend to households and businesses by up to £150 billion.
"Those U.K. households and businesses who want to seize viable opportunities … can be confident that they will be supported by the financial system," Bank of England Governor Mark Carney said at a media conference on Tuesday. He emphasized that capital buffer measures were only to support domestic banks.
Following the announcement, the U.K. Treasury issued a statement saying the country's main lenders had agreed to use the extra capital to support lending to the real economy.