The Bank of England has offered to provide $14 billion in money markets in an effort to stabilise the economy.
The unexpected move comes after the bank previously stated it could not and would not do anything to bring down the currently sky-high interest rates.
Banks will be able to offer a wider range of collateral than is normally allowed, including their mortgage debt, reported the Guardian. The move resulted in an increase of confidence in the UK economy.
“Clearly, the problems surrounding Northern Rock have added to pressure on the Bank to normalise money markets,” says Philip Shaw, chief economist at Investec, in an interview with the Guardian. “This measure is being taken in order to alleviate the strains in longer-maturity money markets,” says the bank.