Bank of England makes loans more available

8 October 2008

The Bank of England (BoE) will accept more kinds of collateral from financial institutions in return for loans, it has announced.

Under normal circumstances, the BoE has strict rules about the kind of assets it accepts as collateral for loans to institutions. According to the Daily Mail, it would ‘only accept the best quality mortgage assets as security in return for financial help’.

Now, however, these rules have been relaxed to some extent, helping banks – and therefore also helping consumers.

As Bloomberg reports, the Bank will now accept ‘top-rated securities tied to “some” corporate and consumer loans at its weekly auction’, basically helping financial institutions by making it easier for them to access loans.

In the words of Bank of England governor Mervyn King: “In these extraordinary market conditions, the Bank of England will take all actions necessary to ensure that the banking system has access to sufficient liquidity.”

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