21-04-2008
Bank of England launches liquidity scheme
News by Adfero for Simply Business - independent providers of public liability insurance, business finance, landlord insurance, buy-to-let mortgages & commercial mortgages.
Buy-to-let mortgage loans and other forms of borrowing could become more accessible following an announcement from the Bank of England of a new liquidity scheme for the nation's banks.
Lending criteria has tightened in recent months as banks found themselves stretched by the overhang from securities markets. To ease this pressure, the Bank will allow institutions to swap illiquid assets for Treasury bills for a limited period.
Mervyn King, governor of the Bank of England, said the scheme is "designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks".
The news was welcomed by the British Bankers' Association, which believes the offer will make "a significant contribution" to easing the strain on the UK's money markets and restoring stability to the economy.