Thursday, 13 September 2007

How much?

From today's FT:

Continued high overnight interest rates forced the Bank of England to offer £4.4bn additional cash to commercial banks on Thursday morning, in an effort to normalise the money markets.

A decent sized conduit or SIV is £5B so the bank's extra liquidity is less than one conduit's worth. Is anyone else surprised how relatively small the bank's offer is? Personally I think they are doing an excellent job in not rescuing the imprudent, but I wonder if £4B is significantly different from zero.

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