The Bank of England will ease its lending criteria for short-term loans in order to help banks during the liquidity crisis.
Having received much criticism for failing to act, the bank’s governor Mervyn King has accepted the central bank will need to take bigger risks to prevent the financial system from collapsing. Commercial banks hoping to borrow money from the Bank of England for one week will now be able to secure the debt against riskier assets than were previously accepted. Reports suggest the Bank of England will not take on so-called ‘toxic’ debts, but will accept a wider range of securities. The move means institutions taking on short loans of just a week will now be able to swap the same assets as t...
To continue reading this article...
Join Professional Adviser for free
- Unlimited access to real-time news, industry insights and market intelligence
- Stay ahead of the curve with spotlights on emerging trends and technologies
- Receive breaking news stories straight to your inbox in the daily newsletters
- Make smart business decisions with the latest developments in regulation, investing retirement and protection
- Members-only access to the editor’s weekly Friday commentary
- Be the first to hear about our events and awards programmes