‘Funding for lending’ may suffer side effects – BIS committee

Survey finds lending schemes tend to be effective, but firms may become dependent

The Bank for International Settlements, Basel
The Bank for International Settlements, Basel
Photo: Ulrich Roth

‘Funding for lending’ (FFL) schemes were effective in alleviating the impact of the Covid-19 crisis, but may come with side-effects, a study published by the Bank for International Settlements finds.

The BIS markets committee found a majority of its 27 member central banks introduced FFLs for the first time in response to the pandemic. The schemes involve offering financial firms cheap funding if they increase lending to certain sectors. In many cases, the target sectors aligned with government

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