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| Version 2 | Version 3 |
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| Bank to detail £50bn bonds plan | Bank to detail £50bn bonds plan |
| (about 1 hour later) | |
| The Bank of England is to announce details later of a plan to help prevent the credit crisis causing more damage to the UK banking system and economy. | The Bank of England is to announce details later of a plan to help prevent the credit crisis causing more damage to the UK banking system and economy. |
| Banks will be able to swap potentially risky mortgage debts for £50bn worth of secure government bonds to enable them to operate during the credit squeeze. | |
| Ministers hope the plan will alleviate problems in the mortgage markets. | Ministers hope the plan will alleviate problems in the mortgage markets. |
| BBC business editor Robert Peston said it could be the world's most generous plan to help the banking system. | |
| 'Ambitious plan' | 'Ambitious plan' |
| This was especially so because the Bank of England was regarded as more conservative in its financial support for banks than the Federal Reserve in the US and the European Central Bank, he said. | |
| Under the scheme, banks will be allowed to swap their mortgage debts for government securities. | |
| The Bank is expected to say that it expects around £50bn of these securities to be issued to banks in the first instance, but that it would be prepared to provide more help if required. | |
| On Sunday, Chancellor Alistair Darling said that without the Bank of England's intervention, there was "every chance" the UK's financial crisis would get worse. | On Sunday, Chancellor Alistair Darling said that without the Bank of England's intervention, there was "every chance" the UK's financial crisis would get worse. |
| He confirmed the Bank would be setting up a scheme to help banks operate during the credit squeeze but insisted the loans would have to be paid back. | He confirmed the Bank would be setting up a scheme to help banks operate during the credit squeeze but insisted the loans would have to be paid back. |
| Sub-prime problems | Sub-prime problems |
| Mr Darling will reveal the full details of the plan to MPs in the House of Commons after the announcement by the Bank. | |
| British banks have become increasingly unwilling to lend to one another as a result of the credit crisis, which was sparked by massive losses for banks who lent in the US sub-prime sector. | British banks have become increasingly unwilling to lend to one another as a result of the credit crisis, which was sparked by massive losses for banks who lent in the US sub-prime sector. |
| Many investors, concerned about what happened to sub-prime mortgages in the US, no longer want UK mortgage-based assets and the disappearance of this market has deprived banks of tens of billions of pounds of finance for mortgage lending. | Many investors, concerned about what happened to sub-prime mortgages in the US, no longer want UK mortgage-based assets and the disappearance of this market has deprived banks of tens of billions of pounds of finance for mortgage lending. |
| It is one of the main reasons why the cost of mortgages for many homeowners has been rising, even though the Bank of England has been cutting its base lending rate. | It is one of the main reasons why the cost of mortgages for many homeowners has been rising, even though the Bank of England has been cutting its base lending rate. |