Providing cover

The Bank of England offers help

AS THE global banking crisis has gone on, central banks have repeatedly had to improvise responses to an ever-worsening financial storm. In America, the Federal Reserve stretched its powers to the limit when it organised the rescue of Bear Stearns. Now the Bank of England has come up with an innovative plan?a ?special liquidity scheme? that may provide at least GBP50 billion ($100 billion) to help troubled British banks.

The need for a new approach has been clear for several weeks. The most obvious sign has been the elevated (Libor) rate at which banks raise funds through the money markets. This is normally quite close to the Bank of England?s base rate, which sets the cost of overnight funds. When the crisis struck last August, however, it soared (see chart). ...


[Source: The Economist: News analysis - Posted by FreeAutoBlogger]

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