The Bank of England fears that the credit crisis has entered a new and more serious phase as British banks yesterday took steps to increase their borrowing facilities with the central bank to insulate themselves from another lending panic. Financial Times

UK banks asked to increase sharply the reserves they hold on deposit at the Bank this month to the highest ever level amid concerns that the instability of the banking system could suddenly leave them desperate for cash. They fear another bank crisis – akin to the collapse of US investment bank Bear Stearns – could see the market seize up.