OTTAWA–The Bank of Canada says it will inject an additional $8 billion into the country's tight money markets under new liberal terms.

The bank says the new Canadian-dollar term loan facility will be conducted in four auctions of $2 billion each over the next few weeks.

Qualifying financial institutions will be able to offer non-mortgage loans as collateral, meaning they can offer most loans currently on their books.

But as a result of the riskier nature of the transactions, the central bank said it will take a 40 per cent "haircut" on the loan value.

"A collateral-to-loan value of 60 per cent reflects the unique risks associated with accepting the non-mortgage loan book as collateral, including those related to valuation and to the costs of having to realize on those assets," the bank said in a statement.

The Bank of Canada said the latest measure is consistent with commitments Canada made under the G7 plan of action to "provide exceptional liquidity."

Earlier in the morning, Finance Minister Jim Flaherty said Ottawa will purchase an additional $50 billion in bank-held mortgages, tripling the measure first announced on Oct. 10.

The dual moves suggest that despite recent improvements in money markets, officials believe credit is still too difficult to obtain and too expensive.

Various industry groups, notably the auto sector, have complained about credit tightness and have asked Ottawa to guarantee loans so they can finance operations.

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