The Bank of England believes that financial firms have now lost around £1.8 trillion due to the continuing credit crunch. It is believed that central banks and governments have now spent £5 trillion trying to support banks and prevent them from going down.
The bank also warned that if the recent sharp fall in house prices continue 1.2 million homeowners will fall into negative equity. The Bank of England has said that banks could face a lot stricter measures to stop this from happening again. The estimate the bank made on global losses has now doubled since the original estimation in May.
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