Bank of England (BoE) has denied a newspaper report that there are plans for purchasing mortgage securities by using public funds in order to ease and end the current credit crisis. BoE denying the report of Financial Times stated that all Central Banks will work to solve the crisis and the Bank is enthusiastic in exploring all options including involvement of public money as a financial instrument to solve the crisis.
In the report of Financial Times it is said that the Federal Reserve accepts the proposal in principle but the European Central Bank (ECB) is not happy with the idea. However, Britain’s Finance Ministry declined to comment on this issue. Central banks are currently prepared to provide loans against the plummeting mortgage securities to solve the problems of falling prices, forced sales and declining balance sheets for the banks. So, Banks have so far written down more than 63 billion pounds of properties by thrashing their shares.
It is said that Central banks and Governments have made all possible efforts to resolve the credit crisis. For instance, Northern Rock mortgage bank has been nationalized by Britain to reduce chaos in the financial market. Similarly, IKB lender is rescued by Germany and Bear Stearns rescue effort is presided over by United States to maintain order. However, in spite of all these attempts global markets still face credit crisis and it is apprehended that the situation may worsen further in the near-future. |
