The Bank said it will adjust stress test levels every year depending on the financial cycle.
The move could result in lenders upping the required core capital buffer from 4.5% this year to around 6% next year.
British units of foreign investment banks and smaller lenders will escape these new stress tests, which will only impact lenders with more than £50bn of retail deposits.
Mark Carney, governor of the Bank of England, said: "The United Kingdom needs banks that can weather shocks without cutting lending to the real economy.”
“The Bank of England is taking steps to ensure we can assess a range of future risks from a number of different sources to inform our micro- and macro-prudential policy decisions. Our approach embodies a comprehensive and detailed approach, a desire to deepen and strengthen our analysis, and the flexibility to respond to changing risks.”
The British Chambers of Commerce said: "The Bank's decision to link stress testing expressly to the needs of the real economy will reassure business."
