Bank details £50bn lending boost
Written: 21st April, 2008
The Bank of England has announced details of a plan to help prevent the credit crisis causing more damage to the UK banking system and economy.
Banks will be able to swap potentially risky mortgage debts for £50bn of secure government bonds to enable them to operate during the credit squeeze.
The Bank's governor, Mervyn King, said the scheme aimed to improve liquidity in the banking system.
It should also increase confidence in financial markets, he added.
Under the scheme, banks will be allowed to swap their "high quality" mortgage debts for government securities.
The swap will be for a period of one year and may be renewed for a total of three years.
It will only apply to mortgage debts on banks' books at the end of 2007 and the swaps cannot be used to finance new lending.
Source BBC news