The Bank of England has put forward proposals to relax several capital rules, even as officials express heightened concerns over threats from artificial intelligence, a geopolitical outlook filled with uncertainty, and rapidly increasing leverage levels.

Policymakers stated on Tuesday that they will launch a consultation on adjustments that would reduce the total capital UK banks are required to hold against a key risk measure by 20 basis points. This measure is known as the leverage ratio.

The central bank will also implement temporary changes, allowing the UK's largest domestic lenders—including NatWest Group Plc, Lloyds Banking Group, and Nationwide—to draw down capital buffers during periods of stress. It will also seek feedback on broader modifications to this rule.

Bank of England Governor Andrew Bailey told reporters that "adjusting our capital framework is a judgment that requires careful balance." He added that the package of measures is "practically significant" and will boost lending "without unduly compromising the safety and soundness of financial institutions."

These proposed changes are a practical follow-up to the central bank's stance from December of last year. At that time, it indicated that the optimal level of capital for banks should be 1 percentage point lower than previous guidance, partly due to reforms implemented after the financial crisis.

The leverage ratio, a metric that limits total borrowing, is one area the Bank of England has stated it will consider adjusting. Meeting minutes show that some members of the Financial Policy Committee were concerned the proposed adjustments "could lead to an unwelcome increase in market-based leverage, affecting the resilience of core UK markets."

The Bank of England will assess the impact of these proposals on financial stability before launching a public consultation in the first quarter of next year.