LONDON (SHARECAST) - British banks need capital buffers to protect them against current huge risks, but that should not come at the expense of well-judged lending, a member of the Bank of England's Financial Policy Committee wrote in a newspaper on Friday.
"Banks face exceptional risks at the current time. The banking system needs to be safer, it needs buffers in case these risks were to crystallise," Paul Fisher said in City AM, Reuters is reporting.
He added, however, that, "But that should not come at the detriment of lending or risk-taking, because these are essential parts of banks' business models. Instead of worrying about the perceived costs of regulation, people should focus on the benefits to everyone of a safer banking system that takes measured risks through well-judged lending."
"We want banks to take appropriate risks - every loan a bank makes carries a certain amount of credit risk ... An extra pound of capital does not mean a pound less of lending," Fisher wrote.