The Bank of England Makes a Capital Mistake

The Bank of England is right to do everything in its power to support the U.K. economy following the vote to leave the European Union. Weakening the finances of the country’s banks, though, is the wrong way to go about it.

Governor Mark Carney has announced that, among other measures, the BoE will let banks operate with less equity than previously planned. The idea is to make banks more willing to lend, by relieving them of the concern that new loans would bring their equity levels below regulatory minimums.