This article is from the source 'bbc' and was first published or seen on . It will not be checked again for changes.

You can find the current article at its original source at http://news.bbc.co.uk/go/rss/-/1/hi/business/7149153.stm

The article has changed 7 times. There is an RSS feed of changes available.

Version 2 Version 3
Bank lends £10bn to ease crunch Bank lends £10bn to ease crunch
(10 minutes later)
The Bank of England has lent banks and financial institutions £10bn in a move analysts expect to ease the impact of a credit crunch and high borrowing costs.The Bank of England has lent banks and financial institutions £10bn in a move analysts expect to ease the impact of a credit crunch and high borrowing costs.
Borrowers bid for the cash at auction with 75% of bids allotted at the lowest rate 5.36% - below the central bank's official rate of 5.5%.Borrowers bid for the cash at auction with 75% of bids allotted at the lowest rate 5.36% - below the central bank's official rate of 5.5%.
The highest accepted rate was 6.6%, giving a weighted average rate of 5.949%, the Bank said.The highest accepted rate was 6.6%, giving a weighted average rate of 5.949%, the Bank said.
It is one of five central banks that have pledged emergency cash.It is one of five central banks that have pledged emergency cash.
'No silver bullet''No silver bullet'
The aim of the cash auction was to cut the cost of lending between retail and commercial banks, which has jumped in the past few weeks.The aim of the cash auction was to cut the cost of lending between retail and commercial banks, which has jumped in the past few weeks.
It had remained stubbornly high despite interest rate cuts in the UK and US.It had remained stubbornly high despite interest rate cuts in the UK and US.
Should the borrowing costs stay high, then this may end up being passed on to consumers, slowing economic growth.Should the borrowing costs stay high, then this may end up being passed on to consumers, slowing economic growth.
The European Central Bank said on Tuesday that it would offer up to $500bn to the markets with more available if needed.The European Central Bank said on Tuesday that it would offer up to $500bn to the markets with more available if needed.
And on Monday the US Federal Reserve made $20bn available through auction, though it did not say how many banks took advantage of the extra money.And on Monday the US Federal Reserve made $20bn available through auction, though it did not say how many banks took advantage of the extra money.
The national banks of Canada and Switzerland are also involved in the plan which will together see the banks inject at least $600bn.
US Treasury Secretary Henry Paulson said on Monday that there was no "silver bullet" to solve the credit market problems.US Treasury Secretary Henry Paulson said on Monday that there was no "silver bullet" to solve the credit market problems.
Cash lubeCash lube
Global financial markets have been dealing with a number of problemsGlobal financial markets have been dealing with a number of problems
In London, the Libor rate - at which banks lend to one another - dropped for a third session on Monday, signalling that the central banks' rescue plan may be having an effect. In London, the three-month sterling Libor rate - at which banks lend to one another - dropped for a third session on Monday, signalling that the central banks' rescue plan may be having an effect.
The Libor, which stands for the London Inter-bank Offered Rate, dipped to 6.431%, compared with 6.627% on Wednesday last week when the central banks unveiled their rescue plan.The Libor, which stands for the London Inter-bank Offered Rate, dipped to 6.431%, compared with 6.627% on Wednesday last week when the central banks unveiled their rescue plan.
The lower the rate, the cheaper it is for banks to borrow money.The lower the rate, the cheaper it is for banks to borrow money.
As well as the Bank of England and the Fed, the European Central Bank and the national banks of Canada and Switzerland are also involved in the plan.
Together, the banks are to inject at least $600bn.
The main reason banks have been unwilling to lend to each other is a downturn in the US property market.The main reason banks have been unwilling to lend to each other is a downturn in the US property market.
A surge in mortgage defaults and bad debts has forced many banks to cut the value of their mortgage investments, costing them billions of dollars.A surge in mortgage defaults and bad debts has forced many banks to cut the value of their mortgage investments, costing them billions of dollars.
As a result, the banks fear that they might need any spare cash they have to cover their losses.As a result, the banks fear that they might need any spare cash they have to cover their losses.