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The Bank of England, which is struggling to contain its overheated growth and debt load, has launched a “suntrust” account to encourage customers to use their savings and other assets to help the economy recover.
The new “sunbonds” will allow people to deposit up to £300,000 in their accounts every week to help businesses and households outpace the government’s plans to cut interest rates.
But the move has drawn criticism from some of the country’s biggest financial institutions, who say it is being used to create a “shadow banking” system.
The bank, which has a net assets of £1.2 trillion, says it wants to give businesses a “clean slate” to grow while encouraging people to invest in their businesses.
“We need to help ensure that everyone has access to a safe and secure place to invest, so that they can grow, create jobs and create wealth for their families,” said George Osborne, the chancellor, in a statement.
He said that the Bank would “fully implement” the new account as soon as it became operational.
But it has also faced criticism from other major financial institutions who have argued that the account, which will be available to people aged over 65, will encourage people to use the bank to make a quick profit, and will also encourage people who want to spend the money to invest.
The Suntrust bank was launched last week and it is part of a wider initiative to encourage people in low-income households to invest more in their homes, as well as businesses.
It also allows people to withdraw money from their savings into a new account for their family, friends and other members of the household.
The accounts are open to people in households earning less than £30,000 per year.
It will allow savings to be used for mortgage payments and rent, for example.
“This is a great opportunity for the Bank of London to give everyone a clean slate,” said John Gidley, chief executive of the Financial Conduct Authority, which oversees the banks’ activities.
“The Sunbonds will allow them to use savings and assets to make their everyday lives more sustainable.
It’s a really good start, and one we welcome.”
In the run-up to the election, the Bank has faced criticism that it was not doing enough to encourage savings and to support businesses.
The Chancellor has promised to reduce interest rates to help stimulate the economy and help the banks recover from the economic crisis.
Last month, the bank said it would cut its own rates, but said that rate cuts were only temporary and that it would look to return to normal interest rates by the end of the year.
Mr Osborne has also said that he wants to see savings levels rise to £30 a week by 2020.