How does a bank work? In very simple terms, a bank collects deposits from savers, and lends the money to borrowers. It pays interest on the deposits, charges a higher rate of interest on what it lends, and keeps the difference as profit.

In England, it’s local elections. In London, it’s decision time for choosing a Mayor too… Ken, Boris or Brian..?

Now the days are not only longer but finally starting to warm, what happened in the financial world this week? Well, on Monday Mervyn King stepped up to the plate and offered a deal for UK banks. They could swap assets of unknown worth mortgage-backed securities for those of known worth government bonds .

“Buy when blood is running in the streets,” goes the old adage. Many people believe that time is now…and Bill Bonner can’t help but wonder: What accident is so bloody and so menacing, that it has the world’s three most powerful central banks racing across town, scattering crowds and ignoring traffic signals?

Well, as I suspected, it doesn’t look like the Bank of England’s £50bn injection is going to bring down mortgage rates any time soon.

The once-booming UK mortgage market is dissolving faster than an Alka Seltzer on a Saturday morning. That seems to be the picture the Bank of England is painting. Yesterday it published one of its many surveys — the quarterly Credit Conditions report.

The pace of inflation in the Euro zone accelerated in March to its fatest pace since 1992, reports The New York Times.

Eurostat, the European statistics agency, said prices rose in March at a 3.5 percent annual rate in the 15 countries that share the euro, the highest rate since June 1992. The rate in February was 3.3 percent, which had itself been a record. Inflation is running far above the European Central Bank’s 2 percent guideline.

The concern about rising prices is not confined to the euro zone. In a speech on Monday, the governor of the Bank of England, Mervyn King, noted that “food prices on world markets are more than 50 percent higher, and oil prices two-thirds higher, than…

Ben Bernanke’s British and European Union counterparts may be gearing up to pump more money into the global banking system, says Bloomberg.

Lloyds predicts King’s next step will be to accept more types of collateral for loans. Trichet will pump more money into banks, RBS forecasts. Such measures would take Europe’s two biggest central banks further down the path laid out by Bernanke this month.