The Bank of England has reported that the financial system in the UK has become ?significantly more stable over the past six months?.
The Bank said that the situation had improved after efforts had been made to improve things, such as quantitative easing and low interest rates. The Bank is in a programme of spending ?200 billion on quantitative easing to give a boost to lending within the banking sector, according to BBC News.
It is hoped that such assistance will improve mortgage lending throughout the country after a squeeze on home loans over the past two years or so.
The Bank?s biannual Financial Stability Report made the comments in its latest edition, also saying that over the last six months banks had increased their profits, reduced concerns over future losses and raised more capital externally, thus reducing the reliance on short-term funding. Despite the good news, the Bank?s report also warned that more time would still be needed for banks to recover from the banking crisis and that they still ?remain vulnerable to the risk of less than expected economic recovery?.
The report described profits in the banking sector as ?relatively buoyant?, and that commercial lenders should ?take opportunities to strengthen their balance sheets?.
According to the report, the root cause of the financial crisis across the world was the ?excessive risk-taking in the upswing of the credit cycle and insufficient resilience in the subsequent downturn?. The Bank said that those two factors needed to be dealt with so that a similar crisis would not occur again.
