Tuesday, 5 March 2013

Funding for lending fails


Well the statement comes from a quarterly report, the last 3 months of 2012, and only 3 months after the fund started, so is it fair?

The BoE bank announced the scheme jointly with the government in June 2012, as a way to unblock a credit log-jam which some economists say is a big factor behind Britain's weak economic recovery. However, banks and building societies cut lending by a net £2.4bn between October and December.

The BoE has consistently tried to encourage banks to lend, but after Basel III the banks have to keep more cash on hand in order to prevent another 2008 financial crisis.

So what is the happy medium?

Stop kicking the banks. When they have bolstered their balances, I am sure they will be more than willing to lend to business of all sizes and even governments again.

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