The Bank of England will be allowed to provide more than £500bn in lending to the economy without seeking the Treasury’s permission, in a move that reinforces the strength of the UK financial system as Britain prepares to leave the EU.

Announcing the plan at the annual Mansion House dinner for bankers in the City of London on Thursday, Philip Hammond, the chancellor, said the changes would help to improve the resilience of the central bank. It would also help with its “ability to meet its monetary and financial policy objectives in the future”, he said.

Hammond said the government would give the Bank £1.2bn, a sum that would underwrite the £500bn lending pot, but the move would not impact public borrowing because the money would remain in the public sector. The half a trillion pound fund could be accessed by commercial banks for funding, including during credit crunch-style financial crises.

The move also gives Threadneedle Street greater autonomy in lowering interest rates to zero and providing more money to commercial banks during times of stress, without requiring Treasury permission. Despite its independence from the Treasury, the Bank has needed to approach the government in order to expand its support to the economy – including when it announced an emergency funding scheme for banks in the wake of the Brexit vote.

Speaking alongside the chancellor at his penultimate Mansion House dinner before stepping down next year, Mark Carney, the Bank’s governor, said the additional capital would significantly increase the amount of money the central bank could lend without seeking financial backing from the Treasury. Although at first it will amount to more than half a trillion pounds, it could rise to over three-quarters of a trillion pounds.

He said the changes could also help the government to strike new deals with emerging markets to facilitate the growth of the UK financial sector, which could increase from 10 times the size of the British economy at present to 15 times by 2030.

“We now have a balance sheet fit for a new world order with greater reliance on markets in a wider range of reserve currencies,” he said.

As part of the changes, the Bank of England will see the emergency funding programme launched straight after the Brexit vote, known as the term funding scheme – which provides banks with cheap finance during times of stress – become part of the Bank of England’s balance sheet rather than the Treasury’s.