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<p>The Government established an independent Financial Policy Committee (FPC) to identify,
monitor and take action to remove or reduce systemic risks with a view to protecting
and enhancing the resilience of the UK financial system. In March 2017 the FPC judged
the appropriate Tier 1 capital requirement for the UK banking system, in aggregate
and net of any countercyclical capital buffer, to be 13.5% of risk-weighted assets,
as currently measured. The FPC’s judgement of the appropriate level of capital for
the banking system was calibrated such that banks could absorb the cumulative losses
in historical stress episodes and continue to provide essential services to the real
economy.</p><p> </p><p>The Government is supporting lending to SMEs in a variety of
ways, including: establishing the British Business Bank to make finance markets work
better for small businesses; supporting challenger banks; introducing a bespoke regime
for peer-to-peer lending; and structural interventions such as the bank referral scheme
and the SME credit data sharing scheme.</p><p> </p>
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