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| Bank details £50bn lending boost | Bank details £50bn lending boost |
| (20 minutes later) | |
| The Bank of England has announced details of a £50bn plan to help prevent the credit crisis causing more damage to the UK banking system and economy. | The Bank of England has announced details of a £50bn plan to help prevent the credit crisis causing more damage to the UK banking system and economy. |
| Banks will be able to swap potentially risky mortgage debts for secure government bonds to enable them to operate during the credit squeeze. | Banks will be able to swap potentially risky mortgage debts for secure government bonds to enable them to operate during the credit squeeze. |
| The Bank's governor, Mervyn King, said the scheme aimed to improve liquidity in the banking system. | The Bank's governor, Mervyn King, said the scheme aimed to improve liquidity in the banking system. |
| It should also increase confidence in financial markets, he added. | It should also increase confidence in financial markets, he added. |
| Under the scheme, banks will be allowed to swap their mortgage debts for government securities. | |
| The swap will be for a period of one year and may be renewed for a total of up three years. | |
| It will only apply to mortgage debts on banks' books at the end of 2007 and the swaps cannot be used to finance new lending. | |
| The BBC's business editor Robert Peston said the move could be seen as a major U-turn by the Bank. | |
| Until now, it has been more conservative in its financial support for banks than the Federal Reserve in the US and the European Central Bank. | |
| Vince Cable, the Liberal Democrats' Treasury spokesman, had warned that the move could effectively nationalise the banks' losses. | |
| But Mr King said the plan ensured that the risk of losses on the loans remained with the banks. |