BoE launches Funding for Lending
George Osborne has hailed a new Funding for Lending scheme announced by the Bank of England today.
The move is aimed at boosting high street lending by giving banks conditional access to cheap funds.
Up to £80bn will be made available, contingent upon banks increasing lending to small businesses by at least 5%. Banks will be able to start drawing on the fund from the beginning of August.
Mr Osborne said the scheme would "make mortgages and loans cheaper and more easily available, providing welcome support to businesses that want to expand and families aspiring to own their home".
He added the scheme would "inject new confidence into our financial system and support the flow of credit to where it is needed in the real economy - showing that we are not powerless to act in the face of the eurozone debt storm".
The Chancellor was also clear that lending would only happen on "a very strict condition, that they lend it on to businesses".
Mervyn King, the Governor of the Bank of England, said: “This joint action by the Bank and the Treasury creates strong incentives for banks to expand their lending to the real economy.
"The more banks expand lending, the more they can use the scheme. That will encourage banks to make loans to families and businesses both cheaper and more easily available".