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The UK government has authorised the Bank of England to spend £50 billion (A$109 billion) of “high quality private sector assets” as part of its latest measures to stimulate the economy.
The objective of the scheme, announced last week, is to increase the availability of corporate credit and get lending flowing again.
“Asset transactions by the Bank [of England] could increase liquidity and trading activity in some UK financial markets and could stimulate issuance by corporate borrowers and the resumption of capital market flows,” Chancellor Alistair Darling said in an open exchange of letters with the central bank.
The Bank of England is also expected to reduce the official cash rate again when it meets next week in an effort to steer the UK out of its current economic crisis.
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