BoE Funding for Lending Scheme sees loans contract in first 6 months

A neon sign advertising loans

Data released today by the Bank of England (BoE) show net lending by banks participating in the central bank's Funding for Lending Scheme (FLS) fell by £2.4 billion ($3.6billion) in the fourth quarter of 2012 – the opposite of the scheme's intended effect, although the BoE suggested the lending contraction was less severe than would have been the case without the FLS.

Under the FLS, the BoE receives Treasury bills from the UK's Debt Management Office, which it passes on to participating banks. I

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