The Government's multi-billion pound Funding for Lending Scheme comes in to effect today.
Under the scheme, banks and building societies will be lent money by the Bank of England at low market rates, under the condition that the funds will be used to offer accessible loan and mortgage rates.
If the Bank believes the institutions have increased their lending, they will be allowed to borrow more at a higher rate.
The purpose of the initiative is to boost the UK 's economy and increase lending to households and small non-finance businesses.
The scheme will be closely monitored by the Treasury and a review will take place to determine if it has been successful.
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