King opposes Treasury's liquidity plans

Mr King has always insisted that, contrary to claims by the Chancellor, the Bank’s £50 billion-plus Special Liquidity Scheme, backed by the Treasury and introduced in April, was not designed to breathe life into a mortgage market in which borrowers are struggling to find home loans.

Yesterday, the Governor again spelt out his view that the scheme, under which lenders can swap mortgage-backed securities issued before the end of 2007 for more easily traded Treasury bills, was aimed only at relieving financial stresses on banks and could not be used to boost mortgage lending. He added that the scheme in its present form would close, as planned, in October.