BoE points out it has existing standby credit facility

The Bank of England pointed out today that it has an existing standing credit facility to help banks out if the need arises.


The privilege comes at a price, however. First, banks will have to pledge eligible collateral, and secondly, the facility is only available at a penalty rate of interest.


"Together with other features of the framework, these facilities were designed to help the system cope with stressed market conditions," the central bank said.


At 14.12 pm BST the overnight LIBOR rate was at 6.50 pct, well up from 5.85 pct on Thursday last week amid global fears of a credit crunch.


The BoE's benchmark refi rate is currently at 5.75 pct after the last quarter point hike in July.