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BOE readies bailout plan for UK banks

The Bank of England is putting the final touches on its most aggressive plan yet to bail out cash-strapped UK banks and ease a credit crunch that is threatening to take a big bite out of the country's economy.

The measures, which could be announced within a week, would help banks find a home for billions of dollars in hard-to-sell mortgages that have been piling up on their balance sheets and preventing them from making new loans. The Bank of England is considering accepting as much as £30bn (€37.6bn) in mortgages from banks as collateral for loans of government securities, which the banks could then use to raise cash, a person familiar with the matter said. The plan would go a step further than central banks in the US and Europe by allowing banks to borrow for periods of a year or possibly more, said people familiar with the matter.

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