The Bank of England is planning to loosen capital requirements for major UK lenders to inject additional liquidity and support lending during periods of stress. The proposals aim to bring UK requirements closer to international standards and follow a relaxation of US leverage requirements in November 2025, which increased competitive pressure on British lenders. Easing these rules would allow banks to deploy more capital towards lending, but it also raises concerns about financial stability and credit quality, as relaxed requirements could encourage lending to weaker borrowers and contribute to higher leverage and risk-taking. The Financial Policy Committee has flagged risks from rapid advances in frontier AI, which could increase cyber and operational threats to systemically important financial institutions. A balanced approach with targeted safeguards is recommended to manage the associated financial stability risks.