UK banks to receive $155bn credit injection

15 June 2012

Britain's banking system is set to benefit from an injection of more than £100 billion ($155 billion) from the government and Bank of England (BoE), it has emerged.

Mervyn King, governor of the BoE, has indicated that policymakers are eager to pump credit into the country's ailing financial sector in an attempt to boost activity and stimulate the economy.

During his annual keynote address to bankers at Mansion House in London, Mr King indicated this long-term and cost-effective funding has been designed to ensure financiers are meeting the level of demand for loans from businesses and consumers.

In addition, the BoE will also activate its emergency liquidity scheme to provide instalments of six-month liquidity worth £5 billion every month to lenders.

"The black cloud has dampened animal spirits so that businesses and households are battening down the hatches to prepare for the storms ahead," the official stated.

Meanwhile, chancellor George Osborne pledged that the government will press ahead with its plans to ring-fence the high street and investment operations of banks.

By Asim Shah

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