Understanding the Funding for Lending Scheme: An Unconventional Monetary Policy Tool

The video discusses the Funding for Lending scheme, an unconventional monetary policy by the Bank of England post-2008 to stimulate the economy. It explains the scheme's mechanics, involving asset swaps and UK Treasury bills, to encourage bank lending. The necessity of the scheme is highlighted due to the 2008 financial crisis, which led to reduced bank lending and investment. The scheme's effectiveness is evaluated, noting its impact on UK business investment and unintended effects on the housing market. Adjustments made in 2014 aimed to refocus lending towards businesses and individuals needing investment.

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