Bank loan move to ease crisis

12:49pm Friday 3rd October 2008

The Bank of England said it would widen the scope of its funding lifeline for the banking sector as it steps up efforts to calm the financial crisis.

The central bank is to allow banks to use some highly rated corporate and consumer loans for the first time as collateral for its weekly cash injection.

Cash-strapped banks have until now only been allowed to use residential mortgage-backed securities.

But they will have to pay a minimum 0.5% more interest to use the facility in return, according to the Bank of England.

Bank governor Mervyn King said: "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."