The Bank of England is expected to finally heed to calls to provide banks with extra support by launching a new lending scheme for UK banks. The Treasury backed programme is similar to that launched by the US Federal Reserve and allows banks to swap their mortgage backed assets for government bonds .
It is hoped the scheme will help banks to borrow and lend to other banks thus helping to alleviate banks’ anxieties about lending to consumers. Whilst banks are set to welcome the programme, leading banks have warned it will need to be on a bigger scale than similar efforts of its kind in the past in order to have any effect.
The government has stated it does not consider the proposals to be a bail out of British banks, and that the scheme will only go ahead if the taxpayer enjoys guaranteed protection from any loss.
Bank of England to Launch Scheme to Help Banks
Bank of England to Launch Scheme to Help Banks
Mon, 21 Apr 2008
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