Mark Carney pledged to shore up financial stability as he warned that the risks from Britain’s shock decision to leave the European Union have started to crystallize.

“There is the prospect of a material slowing of the economy,” the Bank of England governor said at a press briefing in London on Tuesday, after the central bank published its semi-annual Financial Stability Report. “The number of vulnerable households could increase due to a tougher economic outlook.”

Carney’s third appearance in 12 days since the U.K. vote highlights his role as a beacon of stability as political infighting heightens the uncertainty of how the country will now proceed and what the economic fallout will be. The governor has already pledged to make sure banks have access to all the liquidity they need, and signaled rate cuts could be in the offing this summer.

Measures announced by his Financial Policy Committee on Tuesday included a reduction in the capital requirements for banks, which Carney called a “major change.” The so-called countercyclical buffer for U.K. banks was cut to zero from 0.5 percent of risk-weighted assets, a move the FPC said would raise the capacity for lending to companies and households by as much as 150 billion pounds ($197 billion). The higher rate had been due to come into effect in March. Officials now see it staying at zero until at least June 2017.

Carney and the FPC gave a stark warning to banks that they should not use the extra funding they have available to increase dividend payouts.

The 11-member committee also said it is “monitoring closely” five key risks, including any further deterioration in investor appetite for U.K. assets. That’s key as Brexit may deter investors from financing the country’s near-record current account deficit.

The panel is also watching valuations in the commercial real-estate market, the vulnerability of indebted households and landlords, the global economic outlook, and fragile liquidity in financial markets.

“As the outlook evolves, the FPC stands ready to take any further actions deemed appropriate to support financial stability,” the central bank said in its report.

Carney also noted that the BOE may opt to cut interest rates. The Monetary Policy Committee starts meetings this week to prepare for a July 14 decision. The governor said that would be a carefully judged call, taking into account any financial-stability risks from too-low borrowing costs.

Heightened Uncertainty

“In this environment of heightened uncertainty, it’s extremely important that any monetary action—whatever it would be—is well aimed,” he said. Policymakers are “thinking through the potential consequences, intended and unintended.”

While most U.K. stocks have rebounded from their immediate post-Brexit slump, three of the nation’s largest lenders have slid more than 25 percent. Earlier on Tuesday, the pound touched a three-decade low against the dollar. While it rallied after Carney spoke, it was still $1.3181 at 11:41 a.m. London time, down from around $1.50 at the time of the referendum.

On the other hand, while analysts have questioned lenders’ earnings outlooks, bank chiefs have said they haven’t seen stress in funding markets.

Banks hold “substantial capital and liquidity buffers” that can be “drawn on, as needed, to allow the system to cushion shocks and maintain the provision of financial services to the real economy,” the FPC said.

The countercyclical-capital buffer was designed to be eased in a downturn to help support lending. The decision announced on Tuesday will reduce regulatory-capital buffers by 5.7 billion pounds, the committee said. Officials also recommended that the Prudential Regulation Authority—the U.K.’s main bank regulator—bring forward a planned reduction in supervisory capital buffers.

Officials encouraged insurance companies to apply to use the flexibility in Solvency II regulations to recalculate capital levels as they move between regulatory frameworks, so that they don’t rise as market interest rates fall.

The FPC is also watching the potential for buy-to-let investors to behave pro-cyclically and amplify movements in the housing market. Property is one of the key areas that analysts said would be impacted by the vote to leave. A Bloomberg index of house builders has slumped more than 30 percent since the referendum and Standard Life Investments suspended trading in its 2.9 billion-pound U.K. Real Estate fund on Monday.

Particularly Vulnerable

“U.K. commercial real-estate transactions are particularly vulnerable to a change in investor preferences,” the Financial Stability Report said.

The current-account deficit—which stood at 32.6 billion pounds in the first quarter, or 6.9 percent of economic output—”is high by historical and international standards,” the FPC said. It is monitoring for a “further deterioration in investor appetite for U.K. assets.”

Ultimately, Carney’s advice to Britons was to be “prudent” with their finances—a message he said he would always deliver.

“You want to make sure that as a family, as an individual, that you’ll be able to service that mortgage when times are tough; you don’t want to lose your home,” he said. “We’d tell you that if we were in the 10th year of a boom.”

Topics Legislation Europe