Bank of England sets out plan to ease bank leverage rules
Banks say the change could lift gilt demand by up to £150 billion and cut government debt interest by £2.5 billion a year, Barclays said.
- The Bank of England plans to review leverage rules that currently discourage banks from holding British government bonds, which could potentially lower public borrowing costs by over £1 billion annually.
- Barclays suggests that excluding ‘unencumbered’ gilts from leverage ratio calculations could boost banks’ gilt holdings by £150 billion, reduce yields by 0.2%, and save the government approximately £2.5 billion yearly in interest.
- Former regulators warn that exempting gilts from leverage requirements could increase financial risks, as government bonds are not risk-free and such changes may create vulnerabilities.
- The Bank of England also monitors risks in private credit markets and the gilt repo market, with planned regulatory updates but rejecting a full exemption of gilts from leverage rules as too risky.
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Bank of England set to review leverage rules for government bonds
The Bank of England could give Britain's government bond market a boost this week and lower public borrowing costs by more than £1 billion ($1.3 billion) a year, banks say — but some former regulators warn a change in rules to achieve this would increase financial risks. The BoE is…
The Economic Times
Times of IndiaGlobal Market: Bank of England weighs leverage rule changes to boost gilt demand
Britain's government bond market could see a significant boost and borrowing costs slashed by over £1 billion annually if the Bank of England eases bank leverage rules. Major lenders are pushing for exemptions on government bonds, estimating substantial increases in gilt demand. However, former regulators warn this could weaken financial safeguards, prompting the central bank to explore alternative regulatory adjustments.
Bank of England sets out plan to ease bank leverage rules
The Bank of England on Tuesday set out plans to relax rules on how much capital banks have to hold against shocks, aiming to align requirements for British banks more closely with international standards as regulators globally come under pressure to revisit requirements aimed at shoring up resilience.
BoE publishes latest Financial Stability in Focus on the bank capital framework
On 7 July 2026, the Bank of England (BoE) published its latest Financial Stability in Focus (FSiF) setting out the FPC’s view on specific topics related to financial stability.BackgroundIn December 2025, the FPC revisited its assessment of appropriate capital requirements for the UK banking system. The FPC welcomed feedback received from a broad group of stakeholders on the issues covered in its December 2025 FSiF. This included feedback on the …
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