With the global economic downturn intensifying in the past two months, the UK Government has today announced a comprehensive package designed to reinforce the stability of the UK's financial system.
The package aims to address the current barriers to lending by:
- extending the drawdown window for new debt under the UK Government's Credit Guarantee Scheme (CGS) which is designed to reduce the risks on lending between banks;
- establishing a new facility for asset backed securities;
- extending the maturity date for the Bank of England's Discount Window Facility which provides liquidity to the banking sector by allowing them to swap less liquid assets;
- establishing a new Bank of England facility for purchasing high quality assets;
- offering capital and asset protection scheme for banks, with proposals for this to be co-ordinated internationally; and
- clarifying the regulatory approach to capital requirements, through an announcement by the Financial Services Authority (FSA).
Please click here to review the HM Treasury statement on financial intervention to support lending in the economy.