Details of bank landing scheme to be unveiled
Published 17 July 2012
At a time when banks are finding it more difficult and more costly to borrow, a new scheme is set to be unveiled, aiming to increase lending by banks.
Details of a scheme designed to increase lending by banks are set to be announced by the Bank of England and the Treasury, the BBC reports.
The scheme, which is one of a number of measures to try and increase lending, plans to make billions of pounds of cheap funds available to banks who agree to use the money to lend to consumers and businesses.
This marks the first time that loans to banks have been made conditional on the funds being transferred to borrowers through mortgages or business loans. If high street banks boost their lending by 5%, the central bank could make £80 billion available.
Governor of the Bank of England, Sir Mervyn King, announced the move - known as the 'Funding for Lending' scheme - in his Mansion House speech last month. However, the success of the scheme rests largely on whether the initiative actually persuades banks to make affordable credit available to a wide number of borrowers.
The scheme comes at a time when banks are finding it more difficult and more costly to borrow, as the worsening conditions in the eurozone continue to have a big impact closer to home. This week, the Bank's Governor told the BBC that "a great black cloud of uncertainty" is looming over global business as a result of the eurozone debt crisis.