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Bank of England acts to keep banks lending through 2021

https://foundflight.com/cities/london/ LONDON (Reuters) -The Bank of England took steps on Friday to keep banks lending through 2021 as Britain deals with the COVID pandemic and a big change in its trading relationship with the European Union.

The central bank said the counter-cyclical capital buffer will be kept at zero until at least the last quarter of 2021 - extra money banks must set aside during economic good times.

There is no need for banks to introduce any potential changes before the end of 2022.

"Some headwinds to the capital ratios of banks are... The BoE said in a half-yearly assessment of the health of the financial system that it anticipated that unemployment will rise over the coming quarters, business insolvencies will rise from current low levels, and risk weights will increase on bank exposures.

"The United Kingdom's major banks, however can absorb credit losses in the order of 200 billion pounds, much more than would be implied if the economy followed a path consistent with the central forecast of the Monetary Policy Committee," it added.

The BoE also reiterated that after a post-Brexit adjustment phase ending on Jan. 1, it did not intend to loosen financial standards.

"Regardless of the basic shape of the UK's potential relationship with the EU,... The Financial Policy Committee remains committed to the introduction in the United Kingdom of robust prudential principles.

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