-Updates Version Transmitted At 1046GMT
-Says Significant Number Of Other Banks To Sign Up Shortly
-Libor, Other Scandals Sucking Confidence Out Of Financial Sector

LONDON (MNI) – Bank of England Monetary Policy and Financial Policy
Committee member Paul Fisher has announced that the banks and buildings
that have signed up for the Funding for Lending scheme account for
almost three quarters of the stock of lending to UK households and
corporates with more banks set to sign up shortly.

“Together these banks account for around 73% of the stock of
lending to UK households and corporates. I should also note that a
significant number of other institutions are close to signing up too and
we will update this table in due course,” he said.

Fisher also said that the BOE will publish data in December on how
much of the money set aside for the FLS scheme has been used by banks.

“We will publish the first set of drawdown data in December,
although you will have seen that one bank has already announced that it
has drawn Stg1bn and plans to draw more. That said, it will probably
take some time for banks to review fully their lending plans, and it is
likely that drawings from the FLS will be spread out over the full
window to end-2013,” Fisher said.

In a speech at Richmond University here, Fisher also said that he
is confident that the BOE’s Funding for Lending scheme will help get
more credit flowing from the financial sector to the real economy.

But in other comments, Fisher seemed to temper his confidence in
the new scheme:

“I am confident that the FLS will help the supply of credit. Before
its introduction, it was more likely than not that the stock of credit
would contract further over the next 18 months. Perhaps it still may.
But any return to positive credit growth would be a better outcome than
we could have previously hoped for,” Fisher said.

Fisher said that unconventional policies were now the “new normal”
among global central banks.

Turning to discuss the ongoing European sovereign debt crisis,
Fisher said that the European Central Bank’s new bond purchase plan
announcement had helped calm financial markets.

“I hope that the ECB action lays the foundation for a successful
resolution of the European debt crisis. The view of markets so far is
positive in that regard,” he said.

“I would caution, however, that we have been here before. Along
with every other market participant I hope that this time will be
different. But central banks cannot solve fundamental problems in the
real economy, even using unconventional measures – they can only give
the time and space for governments and private sector agents to do so,”
he added.

While Fisher said that he hoped the new OMT scheme will work, he
warned that central banks cannot solve the underlying problems facing
struggling euro zone states.

“Central banks cannot solve fundamental problems in the real
economy, even using unconventional measures – they can only give the
time and space for governments and private sector agents to do so,”
Fisher said.

“There will now be a period of opportunity for the politicians of
Europe to get on with making the changes that would really make a
long-term difference, such as improving competitiveness in the countries
of southern Europe,” he added.

Fisher also said that in the world of central banking,
unconventional monetary policy actions represent a “new normal”.

The MPC/FPC member also said that the ongoing Libor investigations
and other scandals were sucking confidence out of the UK financial
sector.

“A series of home-made disasters have also rocked the sector. The
UBS “rogue trader”, the losses at JP Morgan’s Chief Investment Office,
LIBOR manipulation at Barclays (with others under investigation) and the
mis-selling of PPI. These scandals have not so far been
institution-threatening, but coming on top of the financial and
macroeconomic crisis to date, they have helped to suck confidence from
the financial sector just when it might otherwise have been recovering,”
he said.

-London newsroom 0044 20 7862 7491; email: ukeditorial@marketnews.com

[TOPICS: M$$BE$]