Wednesday, 21 January 2009
Bank is given the green light to print more money
The Bank of England was today given a licence to print more money to bail out the failing economy.
In a drastic new twist to the financial crisis, the Bank's monetary policy committee has been told it can increase the money supply if it believes more cash is needed to kick-start the financial sector.
The Chancellor today gave the go-ahead to a £50 billion asset purchase mechanism in which the banks can trade currently illiquid assets for cash so they can re-enter the credit and lending markets.
But the Treasury said even more could be provided by the MPC ordering the printing of more money: "The programme also provides a framework for the MPC to use asset purchases for monetary policy purposes should the MPC conclude that this would be an additional tool for meeting the inflation target."
In a drastic new twist to the financial crisis, the Bank's monetary policy committee has been told it can increase the money supply if it believes more cash is needed to kick-start the financial sector.
The Chancellor today gave the go-ahead to a £50 billion asset purchase mechanism in which the banks can trade currently illiquid assets for cash so they can re-enter the credit and lending markets.
But the Treasury said even more could be provided by the MPC ordering the printing of more money: "The programme also provides a framework for the MPC to use asset purchases for monetary policy purposes should the MPC conclude that this would be an additional tool for meeting the inflation target."
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