AS: Banking Failure

Despite the base rate of interest falling from 5% to 0.5% and staying low for the last 4-5 years high street banks have not passed on these falls in the rate of interest e.g. household loans at 10 % or business loans or credit card charges at 20%. To overcome this and force the banks to lower interest charges the Bank of England has increased the quantity of money supplied in the economy, known as Quantitative Easing (QE). So far £375 billion has been pumped into the economy to encourage credit easing.