(@econstevem.bsky.social)

The Bank of England’s capital mistake? On 2 December 2025, the Bank of England’s Financial Policy Committee announced it would be lowering the capital requirement for UK banks. This column argues that higher macro-financial risk and sharply reduced fiscal capacity point to a need for higher rather than lower bank capital requirements. The most likely practical effect of this weakening of resilience will be higher payouts to bank shareholders, rather than increased lending to the real economy. https://cepr.org/voxeu/columns/bank-englands-capital-mistake