U.K. banks should take appropriate risks, as every loan a bank makes involve a certain amount of credit risk, Bank of England policy maker Paul Fisher wrote in a newspaper on Friday.
The Financial Policy Committee asked UK banks to raise capital. An extra pound of capital does not mean a pound less of lending, he wrote in City AM.
"It is not kept in a vault, it is used to support lending," Fisher said. The additional capital should be used to support lending to credit worthy firms and households.
Ensuring strong and resilient banking sector on the one hand and supporting lending and economic growth on the other are not conflicting factors, Fisher said.
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