New UK lending scheme to be funded by BoE money creation – Bailey

LONDON (Reuters) – Britain’s new plan to buy debt issued by companies hit by the coronavirus crisis will be financed by money created by the Bank of England, similar to previous purchases of government bonds under quantitative easing.

“The CCFF will be set up in an entity separate from the Bank. It will be funded by the issuance of additional central bank reserves,” BoE Governor Andrew Bailey wrote in a letter to Chancellor of the Exchequer Rishi Sunak.

“The Monetary Policy Committee welcomes the new facility,” he added, saying policymakers would take its size into account when setting other monetary policy measures such as further purchases of government debt or corporate bonds.