The Bank of England's Paul Fisher, speaking at the Supporting Business for Growth Conference 2013, has said that it isn't really the job of central banks to fund lending. However, these are "exceptional circumstances".
While Fisher said that the Funding for Lending Scheme has been remarkably successful in lowering lending costs, net lending fell by £300m in the first quarter of 2013, despite the government's Funding for Lending Scheme issuing £2.6bn to banks in the same period.
Net lending is an imperfect measure for the effectiveness of the scheme, as reducing lending costs will not necessarily result in an improvement in net lending. Banks can adjust the lending they issue, but have less control over the repayments they receive.
While gross lending might be a better metric, net lending is the one that has been chosen, and the scheme is failing by that yardstick.
Since the introduction of the scheme £16.45bn has been issued to banks while net lending has dropped by £1.8bn over the same timescale.
Fisher added that he wanted to see more transactions to boost housing demand, but does not want to see higher house prices.
On the world economy, he said that he does not consider the Euro crisis to have finished its course, and that UK growth is lagging the US recovery with UK monetary policy likely to remain loose for some time.