(via the very splendid and worthwhile Calculated Risk). Specifically, the Bank could swap MBS for gilts, which could then be used as collateral for interbank loans, with any luck loosening up the interbank market and getting Libor back on track. (On that subject, incidentally, the BBA is bringing forward its Libor review from July and threatening to exclude banks who misreport lending rates. Aaaand up goes Libor again.)
Maybe we should start moving away from Libor, the FT suggests. Or maybe - and the FT doesn't mention this - it's time to take the responsibility of calculating Libor away from the BBA and give it to someone with more clout who could actually enforce accurate compliance. The Bank of England, say?