18 May 2006
The Bank of England (BoE) is changing the way it lends money in order to make the economy more secure.
Its changes will make it easier for the bank to supply money to financial bodies should the UK experience an economic crisis.
It should also help to integrate changes to the bank's base rate into the economy at large, should it opt to alter the rate.
The base rate has a key effect on the cost of lending offered to consumers at large.
Building societies and banks will be lent money on a weekly basis under the new scheme, (cut comma) and will balance their accounts with the BoE every month on average.
Previously, limits had been imposed on lending levels, with institutions having to balance their books daily.
Paul Tucker, head of the BoE's markets division, said that the measures would encourage foreign investment in sterling and would "make the UK financial system less vulnerable in the case of a major incident".
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