(BRUSSELS) - The European Commission is studying a Bank of England plan to free up Britain's home loan market but it is too early to say whether the move would constitute state aid, a spokesman said Monday.

"We are in touch with the UK authorities concerning this scheme and it is far too early to start speculating about whether it is state aid or not," said Jonathan Todd, spokesman for the EU's top competition regulator.

Earlier Monday, the BoE announced a near-100-billion-dollar plan to allow high street banks to swap mortgage-backed securities for government bonds to try to boost liquidity at a time when banks are hesitant to lend to each other.

It is one of the biggest moves by a major central bank to combat the global credit crunch.

Britain's main home loan providers are rapidly tightening their lending criteria as fears persist over the sector's exposure to the collapsed subprime or high-risk housing market in the United States.

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