Bank of England prepares plans for euro collapse

Tuesday, May 29, 2012
By Paul Martin

The Bank of England is poised to cut interest rates or launch another round of quantitative easing if the euro collapses, it emerged on Monday.

By Robert Winnett
TelegraphUK
29 May 2012

A senior official for the Bank said the measures would “again play [their] part in mitigating the impact” of Greece or other countries leaving the single currency.

The comments come after the head of the IMF suggested last week that British interest rates may have to be cut to zero if the economic situation deteriorates.

The Bank has already completed a quantitative easing programme, effectively printing more money worth £325billion and this may be extended again.

Yesterday, David Cameron hosted a meeting with Sir Mervyn King, Governor of the Bank; Lord Turner, the chairman of the Financial Services Authority; and the Chancellor, to discuss contingency plans to deal with the collapse of the euro.

There is growing speculation that Greece may be forced out of the euro following new elections next month, if a coalition government cannot be formed that will back austerity measures.

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