Bank of England announces $100B plan to ease credit crisis
posted 6:03 am Mon April 21, 2008 - LONDON
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The Bank of England announced a $100 billion plan to allow banks to swap mortgage-backed securities for Treasury bills.The bank is aiming to unblock the interbank lending market, where rates have soared in recent weeks as banks have become increasingly reluctant to lend to rivals without knowing the extent of their exposure to the U.S. subprime crisis. The central bank said Monday that it is offering the asset swaps for one year, and they will be renewable for up to three years.
The swaps are available only for assets that existed at the end of last year, and the Bank of England says the commercial banks will still keep the risk of losses on the loans.
The swaps are available only for assets that existed at the end of last year, and the Bank of England says the commercial banks will still keep the risk of losses on the loans.
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