Mervyn King, the Governor of the Bank of England, announced on 11 September 2008, that the Bank of England will consult on plans for a permanent, short-term liquidity insurance facility to enhance the stability of the banking system. The Bank of England intends to publish a consultation paper on this facility shortly. The objective of the new facility is to provide short-term liquidity insurance to financial institutions hit by unexpected shocks. At the same time, the Bank will set out arrangements to ensure that the banking system continues to have access to liquidity insurance after the closure of the existing special liquidity scheme, which was launched by the Bank of England on 21 April 2008 and is due to close on 21 October 2008.

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