Episode
S9 Ep21: The Bank of England's capital mistake?
- Podcast
- VoxTalks Economics
- Published
- Mar 27, 2026
- Duration seconds
- 1479
- Processing state
not_requested- Canonical source
- https://audioboom.com/posts/8879591
Actions
POST https://stenobird.com/v1/public/podcasts/voxtalks-economics-504930/episodes/s9-ep21-the-bank-of-england-s-capital-mistake/transcription-requests
Idempotently request low-priority transcript generation for this episode.GET https://stenobird.com/podcast/voxtalks-economics-504930/s9-ep21-the-bank-of-england-s-capital-mistake.md
Read the agent-friendly Markdown representation of this episode resource.
Summary
"When you look at the world now, does it look more uncertain or less uncertain?" In December 2025, the Bank of England's Financial Policy Committee (FPC) answered that question by cutting the equity capital requirement for UK banks. David Aikman (NIESR) and John Vickers (University of Oxford), two former senior Bank insiders who helped to design the regulatory framework post-GFC, think the committee got it wrong. The FPC lowered the benchmark capital requirement from 14% to 13% of risk-weighted assets, a move that could free up roughly £30 billion of capital across the UK banking system. Aikman and Vickers see no compelling economic reason for the change. They argue that the 2015 benchmark was already set too low, built on questionable assumptions about how well resolution frameworks would work. Since 2015, Brexit, the pandemic, and a sharply stretched fiscal position have all increased the likely cost of a future crisis. The practical effect of the loosening may not even be more lending, but higher dividends and share buybacks. And the December decision may signal a weakening of the leverage ratio backstop, the constraint that limits bank borrowing regardless of how risk weights are applied. The research behind this episode: Aikman, David, and John Vickers. 2026. "The Bank of England's Capital Mistake." VoxEU, 15 January 2026. To cite this episode: Phillips, Tim, David Aikman, and John Vickers. 2026. "The Bank of England's Capital Mistake." VoxTalks Economics (podcast). Assign this as extra listening. The citation above is formatted and ready for a reading list or VLE. About the guests David Aikman is Director of the National Institute of Economic and Social Research (NIESR). He worked at the Bank of England from 2003 to 2020, where he served as Technical Head of Divi…