Mervyn King: Financial crisis the worst ever
Mervyn King was explaining the decision to pump an extra £75 billion into the economy
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Friday, 07, Oct 2011 11:23
By Guy Kilty
Bank of England governor Mervyn King has said the current financial crisis could be even more damaging than the Great Depression.
After the bank's Monetary Policy Committee caught financial markets by surprise yesterday (October 6th) by announcing it will inject £75 billion into the economy, Mr King told Sky News the situation is grave.
"This is the most serious financial crisis we've seen at least since the 1930s, if not ever," he said. "We're having to deal with very unusual circumstances and to act calmly and do the right thing. The right thing at present is to create some more money to inject into the economy."
The Bank of England has already pumped £200 billion into the economy through the process known as Quantitative Easing, which involves buying assets such as government bonds in an attempt to boost bank lending.
It means that once its latest round of purchases is complete, it will own around 24 per cent of the outstanding stock of government debt.