The Bank of England revealed today that it has started making asset purchases under its £50 billion pound ($72 billion) program to kick start frozen lending markets as it awaits approval from the government to create new money.

The central bank said it has bought £340 million of commercial paper under the Asset Purchase Facility, which it announced in January and is financed by the Treasury department.

The bank is buying the commercial paper, short-term IOUs sold by companies, in the hope of making it easier for them to raise cash. It did not reveal which companies have used the program.

Economists expect the pace of purchases by the bank to increase once policy makers move on to so-called "quantitative easing" - effectively printing money - to buy up assets. The asset purchases announced Friday are funded by government borrowing and so do not expand the supply of money in the economy.

Minutes of the Bank of England's monetary policy committee released earlier this week showed that Governor Mervyn King has formally asked Treasury chief Alistair Darling for permission to buy government bonds through the facility with money created by the central bank.

"(The fund) will start off fairly gradually, but I imagine they will use all the £50 billion," said Capital Economics economist Vicky Redwood. "So far they have only set up the fund for commercial paper buying ... it takes time to get it going."

Policy makers have been forced to resort to such unconventional measures as lending conditions and capital markets remain tight despite the bank cutting interest rates to a record low of 1 percent.

The bank, charged with keeping inflation at 2 percent, is expecting the cost of living to be well below this level for the next three years as the recession impacts on prices.

Minutes of its February meeting said asset purchases would "strengthen the committee's ability to meet the inflation target."