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Government action may 'boost lending'

Government action may 'boost lending'

Category: Loans

Updated: 22/01/2009
First Published: 22/01/2009

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The government's latest package to aid banks may help increase the level of lending, the centre for economics and business research (cebr) has said.

Managing economist at the cebr Ben Read commented that "toxic debts" were the reason for the credit crunch starting and it is in being able to identify these and have them removed from their books through government action that banks will be able to increase lending once more.

He added: "It is probably quite important that banks manage to get these off the books and can start having the confidence in lending again."

Lenders may be able to offer more unsecured loans to consumers if the scheme is successful.

The latest measures included the introduction of a new facility for asset-backed securities, a capital and asset protection scheme and an extension to the maturity date for the Bank of England's discount window facility, which allows banks to swap less liquid assets for greater liquidity.

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