The global crisis spreads

From CNBC:

The Bank of England's emergency offer of 5 billion pounds of 3-day loans was nearly five times oversubscribed on Monday as financial institutions scrambled for cash in the face of a global credit crunch.

The central bank's "exceptional" offer was a direct result of much tighter money market conditions and was aimed at bringing overnight interest rates down after a spike higher in the wake of the firesale of U.S. investment bank Bear Stearns.

"It was very heavily bid which is not surprising given the overnight bank rate," said Russell Silberston at Investec Asset Management.

"It underlines how determined central banks are to keep some sort of order in the short-dated cash markets."

Overnight sterling lending rates in the interbank market shot above 5.5 percent early on Monday, considerably higher than the Bank's base rate of 5.25 percent.