The Bank of England has cut the capital requirements for UK banks as it looks to unlock lending for businesses and households.
The move will pave the way for an additional £150bn to be pumped into the UK economy.
The Bank’s Financial Policy Committee announced the move as it tries to stop the UK spiralling into a post-referendum economic crisis.
The move sees the countercyclical capital buffer cut from 0.5% of a bank’s risk-weighted assets to zero.
Chancellor George Osborne said of the decision: “[It’s an] important move by Bank of England using tools I gave them to reduce banks’ capital requirements to boost lending capacity by up to £150bn.”
The Chancellor is meeting major banks in Downing Street shortly to discuss the response to referendum result.
He added: “We need a great national effort to steer the UK through this.”