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Wed Aug 1, 2012, 05:33 AM

Funding for Lending bank scheme launched

According to the Bank of England, the Funding for Lending scheme is "designed to incentivise banks and building societies to boost their lending to UK households and non-financial companies".

Under the initiative, the commercial banks will be able to exchange collateral, such as existing loans for pieces of paper known as Treasury bills, on which they will pay an interest rate of 0.25%.

They will then be able to use these bills as backing with which to borrow cash cheaply on the wholesale markets, money they can then lend onto homes and firms.

The programme will supersede the current National Loan Guarantee Scheme.


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