The Bank of England has published its latest estimates on how much the global credit crisis has impacted on both financial firms and the wider economy.
The Bank hints at tighter controls for commercial lenders
The key findings of its latest bi-annual Financial Stability Report are outlined below:
- The world's financial firms have now seen estimated losses of £1.8 trillion ($2.8 trillion)
- In 2001, the level of lending by UK banks to customers was comparable with deposits. By 2008, the lending surplus was £700bn
- The turmoil among financial institutions was "rooted in weaknesses within the financial system that developed during an extended global credit boom"
- "The report notes early signs that central bank and government measures have helped to underpin confidence in the banking system"
- "With a global economic downturn underway, and growing signs of distress among some emerging market economies, the report notes that risks remain in the financial system"
- "We need to establish stronger restraints on the build-up of risks in the financial system over the cycle, with the dangers they bring to the wider economy"
- The Bank says UK lenders should be required to increase their capital levels among other stricter controls
- Losses among UK financial institutions total £122.6bn
- Losses at US financial institutions have reached $1.58 trillion (£1 trillion)
- Losses at financial institutions in the eurozone area have risen to 784.6bn euros ($980bn; £625bn)
- The Bank warns that 1.2 million UK homeowners are now at risk of negative equity if house prices continue recent sharp falls.