Bank of England: New plan for banks

The Bank of England has promised more help for the cash-starved banks and has said that its money market operations will get a complete overhaul. The government from Monday will help ease the pressure of the banks by setting up a new “discount widow” this will allow banks to borrow during a stressed market safe Government gilts against a range of securities.

The new scheme will give banks a wider range of assets to borrow against during its longer-term lending operations, providing better liquidity. However, the banks have been warned that this is to be used only in stressed markets and cannot be used as a longer-term funding to the banking system.

Money markets have eased slightly with the overnight inter-bank lending rate falling to 5.18 percent although this is well above the Bank of England’s base rate of 4.5 percent. The longer term three month lending also fell slightly to 6.18 percent from 6.21 percent.

Source: ukpress.google

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