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London: Britain launched a second bank rescue plan on Monday, one of the recipients, Royal Bank of Scotland, recorded the biggest loss in British corporate history and Japan said bad loans worldwide had further to climb.
The UK government will allow banks to insure themselves against losses on their riskiest assets. It will offer guarantees on their debt and set up a 50-billion-pound fund to buy up high-quality securities to get cash flowing freely again.
The government also gave the Bank of England a green light to increase money supply in the economy if it thought it necessary as interest rates, now at 1.5 per cent, approach zero.
"It sounds very much like quantitative easing," said Alan Clarke, UK economist at BNP Paribas. "The government is giving the Bank of England an additional policy tool."
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