BoE may begin printing money as early as this week

In his latest interview Chancellor Alistair Darling has said that the Bank of England (BoE) could begin using newly created money this week to buy assets and increase the money supply in the economy.

There is likely to be a queue of banks who are hoping to take advantage of the Government’s Asset Protection Scheme (which insures against losses). Royal Bank of Scotland has already signed up to the scheme, while Lloyds are currently reviewing terms – it is hoped the scheme will boost lending.

This week the Bank’s Monetary Policy Committee meets to resume its monthly interest rate decisions and many analysts are predicting that borrowing costs will be cut further and will be a new low under 1 percent which could be the first step in quantitative easing.

Monetary easing is probably needed in order to kick start the economy as the supply of money is not increasing fast enough.

In order to stop the economic fallout from the credit crunch, Darling has said that it is imperative that countries act collectively and that there are measures in place to support the major economies and how lending is made around the world.

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