Bank of England releases funds to calm markets

| March 20, 2008 | 0 Comments

Following the collapse of US investment bank Bear Stearns at the weekend, panic continues to spread through world markets.

Today, the Bank of England has offered £11 billion of funds ahead of a meeting with the bosses of Britain’s biggest banks later today. The £11 billion includes an addition £5 billion on top of the £6 billion that has already been made available.

Bank bosses have told the Bank of England’s Governor, Mervyn King, that more needs to be done to reassure their creditors that the central bank will provide help if required.

The meeting follows another traumatic day on the stock market after rumours that one of the ‘Big Five’ High Street banks, Halifax Bank of Scotland (HBOS) was in crisis.

Sally Dewar, head of the FSA’s wholesale markets, said there has been a series of completely unfounded rumours about UK financial institutions in the London market over the last few days.

We will not tolerate market participants taking advantage of the current market conditions to commit abuse by spreading false rumours and dealing on the back of them, added Ms Dewar.

There was still confusion in the City today over how the rumour about HBOS started. However, most traders have dismissed the issue and a spokesperson for the Bank of England said today’s meeting was scheduled last week and is not in response to any event.

Following the problems at Northern Rock, there are still concerns that other major banks could be forced under without concerted action from Government and central banks to restore confidence.

The FTSE 100 Index opened today down 47.7 points at 5497.9 following another decline on Wall Street.

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