George Osborne unveils credit easing solution
Chancellor George Osborne has revealed that he may revitalise UK businesses by using billions of pounds of public finance to buy corporate bonds, which boost credit supplies for firms of all sizes.
Writing for BBC News, Robert Peston noted that this 'credit easing' strategy would start off with larger companies releasing the financial products and apply to smaller firms over time.
Importantly, this attempt at boosting the liquidity of businesses using cash management services will not add to the national debt, since the bonds will count as tradeable assets.
Mr Peston explained: "The model for all of this is what happens in the US - where there is already a much bigger market for tradeable corporate debt and where in 2009 the US Federal Reserve engaged in pretty significant credit easing."
The chancellor announced the proposals this week, but no firm decisions on the matter are expected before Mr Osborne's autumn statement next month.
According to The Guardian, credit easing is the equivalent of quantitative easing, but instead of the government issuing IOUs, it is companies.
The publication suggested the chancellor is aiming to design his version of the financial strategy in such a way that he gets the benefits of a loan system, while packaging it to look like a government guarantee.