Old Lady could relax collateral rules

The Bank of England may swap mortgage-backed securities for government bonds to ease tensions in sterling money markets.

Suggestions of the move follow pleading from the City of London for the Bank to follow the Federal Reserve and European Central Bank's lead in lending against mortgage collateral.

The Financial Times, a newspaper, reported on Wednesday that the Bank had almost finalised plans to accept some forms of mortgage collateral for loans made before the end of last year.

Such a move

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