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21 April 08 - The Bank Injects £50bn Into System
A £50 billion rescue package for banks hit by the
credit crunch has been unveiled by the Bank of England.
The move will see banks able to swap their riskier mortgage-backed
assets for Government bonds to shore up their finances.
"The scheme aims to improve the liquidity position
of the banking system and increase confidence in financial
markets," the Bank said.
Since the credit crunch erupted last year, banks have suffered
from a crisis of market confidence in bonds secured on mortgages,
due to rising defaults among high-risk "sub-prime"
borrowers in the US.
This has hit banks' ability to raise funds and made them
more cautious over lending to each other - leading to more
expensive mortgage deals for homeowners.
Some observers have criticised the move saying the real
amount the Bank will have to pay out is closer to £100bn
and the tax payer will be left with poor quality loans.
News items supplied by SelectNews, produced by PA Business,
part of the group that owns The Press Association, the UK's
national news agency. Copyright (c) PA Business 2007.
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