RSS FeedsBank of England creates 50 billion credit crunch plan
22/04/2008
A 50 billion plan to ease the impact of the credit crunch has been unveiled today by the Bank of England. The plan allows UK banks to be in receipt of UK Treasury bills in exchange for securities and mortgage backed.
The programme has been structured to help the credit crunch that has hit the UK, The credit crunch has already had a massive impact on the financial industry with the much talked about Northern Rock.
According to Mervyn King of the Bank of England said "What we have to do is to create an environment in which a bank knows that not only it, but other banks, can come to the Bank of England and exchange their illiquid assets for liquid assets," he said. "It is restoring confidence in banks being able to deal with each other that is key in this."
Aiding with increasing cash within these Banks will help re-start healthy lending as apposed to lending organisation holding back on funds. In addition, the Government is also trying to encourage lenders to pass on rate cuts.