The Bank of England plans to loosen capital requirements for UK lenders, potentially benefiting major banks like NatWest and Lloyds. However, policymakers expressed concerns about AI development and debt-fueled stock investments amplifying financial stability risks.
The Bank of England plans to loosen capital requirements for UK lenders, potentially benefiting major banks like NatWest and Lloyds. This move, aimed at boosting lending and competitiveness, faces internal concerns about amplifying risks from debt-fueled stock investments, particularly in AI, and increased cyber threats from AI advancements.
Banks can now legally issue stablecoins and custody Bitcoin, but the Basel Committee's cryptoasset standard imposes a 1,250% risk weight on unbacked crypto, effectively requiring 100% capital backing. This punitive approach, designed in a different era, is now hindering regulated banks' digital asset business and creating regulatory fragmentation, prompting an expedited review.
The European Commission postponed new banking capital rules for market risk by three years to align with US and UK implementation. Meanwhile, Japan's central bank is expected to raise interest rates this month, despite potential market volatility from Middle East conflict.
