The Bank of England yesterday doused hopes that it would move quickly to buy up large volumes of company debt as it set out plans to purchase corporate bonds, commercial paper and Government-sponsored bank debt.

In an exchange of letters between the Bank's Governor, Mervyn King, and the Chancellor, the Treasury authorised the central bank to spend up to £50bn to buy up credit assets in the market to make it easier and cheaper for companies to raise finance.

In his letter, King said: 'I expect the amounts of assets purchased to increase gradually in the early stages of the facility. This will provide scope to assess the impact of those operations on market liquidity.' But he added that the Bank's willingness to buy assets could improve market confidence and liquidity.

Simon Ward, chief economist at New Star Asset Management, said: 'It doesn't seem to be anything comparable with what the [US] Fed has been doing. I was hoping that they would get started with £50bn fairly soon and expand to something like £200bn.'

The Independent