So the Bank of England, together with the Government, has set up the Funding for Lending Scheme (FLS) which provides banks with access to finance for up to four years at below prevailing market rates for term funding. Crucially, the more banks lend to UK households and businesses, the more they can borrow from the Scheme and the cheaper is that funding. That provides a powerful financial incentive for banks to supply more credit. More than 20 banking groups, including the five largest lenders to the UK real economy and covering nearly 80% of all such lending, have so far signed up. Since the Scheme was announced bank funding costs have fallen by around 100 basis points (see Chart 1). Not all of this is attributable to the FLS – the announcement by the ECB of Outright Monetary Transactions has also played an important role. But it is noteworthy that UK bank funding costs have fallen by more since June than have European bank funding costs (see Chart 2). The effect of the FLS will be seen in the lending data only after some months because of the time it takes for banks to change their lending strategies and for data to be collected and published. The FLS can be only a temporary scheme. The window of opportunity which it provides must be used to restore the capital position of the UK banking system.
Speeches  Published Date: 27 May 2022  Welcome Remarks by Mr Edward S. Robinson, Deputy Managing Director (Economic Policy) & Chief Economist, Monetary Authority of Singapore, at the 9th Asian Monetary Policy Forum on 27 May 2022  1 Good morning, MD MAS Mr Ravi Menon, President NUS and Chairman of the ABFER Council, Professor Tan Eng Chye, fellow central bankers, distinguished speakers, ladies and gentlemen. Together with my co-organisers, Professor Bernard Yeung and Professor Steve Davis, I am pleased to welcome you to the 2022 Asian Monetary Policy Forum. 2 In its ninth year now, the AMPF comes at an especially opportune time for macroeconomists to advance the discussion on emergent issues in the global economy. After the Great Moderation, the world has experienced a series of severe shocks, each presenting a stern test for policymakers. 3 The two most recent disruptions—the COVID-19 pandemic and the Russia-Ukraine conflict—have raised fresh issues for monetary economics and international finance. Soon after the Lehman crisis, Queen Elizabeth, during a visit to the LSE, posed an inconvenient question: “why didn’t anyone see this coming?” Conceivably if Her Majesty made another visit today, she may very well ask the same question about global inflation. A comprehensive research agenda to address this query would require pulling together at least four strands of concerns. 4 The first is about the need for a careful identification of each economic shock.