Far from reducing lending, today’s recommendations will support lending and promote growth.
A weak banking system does not expand lending. The better capitalised banks are the ones expanding lending, and it is the weaker capitalised banks that are contracting lending.
– Sir Mervyn King, Governor of the Bank of England
The meeting of these recommendations does not require additional public funds. Banks can meet the recommendations in other ways such as through restructuring.
The shortfall of capital, which the FPC has identified today, is not an immediate threat to the banking system and the problem is perfectly manageable.