Bank may extend Funding for Lending Scheme

The Bank of England has announced that it will make a statement on the Funding for Lending Scheme (FLS) at 06:00 on Wednesday. Our banking reporter Tim Wallace:

The FLS was originally set to run for 18 months, offering four-year loans to the banks and building societies.

It is understood Osborne now plans to extend this to January 2015. The minutes from the Bank of England’s monetary policy committee reveal they too discussed its extension.

The government is believed to be considering how to help small firms in particular as much of the help from the scheme has gone to the mortgage market.

However distorting the market towards one sector may not be a realistic possibility as it would show the government getting too involved in directing the flow of credit.

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