LONDON (Reuters) - The Bank of England has sought government permission to create new money to help pull the economy out of recession, and could start buying government bonds or other securities with the cash within days
So another shoe has dropped, the BoE wants to print money. In theory they will use the printed money to buy gilts from the private sector and maybe other 'paper' and thus inject liquid cash into the economy via the banks, who will then lend it to needy businesses who will use it not to fire their staff who will spend more in the shops because they've still got jobs.
That's only the theory though. In fact I suspect the BoE will additionally buy gilts directly from HM Treasury and thus inject the cash into the government who will use it to replace the taxation revenue they are not getting any more due to having trashed the economy, and also to buy votes for the coming election with lots of generous giveaways and the creation of McJobs to mop up the unemployed.
Needless to say the creation of all this sterling will debauch the currency and cause inflation, which the BoE will studiously ignore - claiming to be looking two years out, like they always do.
British banknotes have a "promise" on them; and a promise is only as good as the person making it - that is, not very good at all. I'd be swapping my British banknotes for someone else's banknotes if I were you.