30/01/2009 - £50bn plan to boost business loans
A £50 billion asset-buying plan has been unveiled by the Chancellor and Governor of the Bank of England in a bid to improve liquidity for credit-starved businesses.
In an exchange of letters, Mervyn King and Alistair Darling said the multi-billion pound fund will be used to buy high quality private sector assets to free up credit and boost the economy.
The scheme will focus on buying corporate bonds, commercial paper and paper issued under the Government's multi-billion pound credit guarantee scheme, but the possibility of buying up syndicated loans and asset-backed securities, which are less stable and harder to sell on the market, will be considered if necessary.
The scheme is one of a number of measures designed by the Government to bring an end to the lending freeze and increase the flow of money.
It is hoped the asset-buying scheme will also help policymakers at the Bank stave off the threat of deflation as interest rates come close to zero.
Copyright © Press Association 2009
Related links
|
