Bank of England proposes easing leverage ratio to boost lending
Business
The Bank of England just suggested making it easier for major UK banks like NatWest, Lloyds, Nationwide, and Santander UK to lend money.
By lowering how much cash these banks have to keep in reserve (dropping leverage ratios by 20 basis points), the hope is to boost lending and help the economy grow.
Officials raise concerns over AI-linked lending
Some officials are concerned this could make the financial system shakier, especially since a lot of bank lending is now tied to investors with debt-fueled bets on booming AI stocks.
Bank of England Governor Andrew Bailey pointed out that "These models are a big step forward in terms of capabilities, and the threat issue is a really a major step forward."
The plan will be reviewed by September 2026 before any final decisions are made.