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Home : Commercial Lending : Bank of Canada opens money spigot in 4 billion lending arrangement
Bank of Canada opens money spigot in 4 billion lending arrangementThe Bank of Canada plans to inject cash into an increasingly shaky credit system on Wednesday by lending as much as $4 billion to commercial banks and investment dealers through what are called purchase and resale agreements.
The step is being taken "in light of increased pressures in term lending markets," the central bank said Tuesday. It is the latest in a series of efforts by governments to pump cash into markets, revive commercial lending and keep businesses from wilting. Whether nervous bankers will be emboldened to lend remains to be seen. The Bank of Canada's move involves buying government bonds and other high-quality securities from the banks and dealers, then selling them back at pre-set prices 28 days later. Such transactions are in effect 28-day loans. In commercial money markets, they would be called repurchase obligations or repos. The prices are to be set by auction Wednesday. The deals run from Oct. 2 to Oct. 30, when a new batch of deals is scheduled to start. http://www.cbc.ca/money/story/2008/09/30/money-injection.html 414 times read
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