April 14 (Bloomberg)--the Bank of England markets Director Paul Fisher said lenders U.K. should be able to stimulate liquidity with active mortgage as the Central Bank winds down its special liquidity scheme.
"A large part of the guarantee displayed as SLS was titles of residential mortgages and residential mortgage obligations covered, where the conditions in the secondary and the repo markets have improved since the beginning of seizure of financial market in 2007""," Fisher said in an article published today by the Bank in London. "It is expected that banks will be able to generate cash using their assets for the mortgage on the private market or by increasing funding by other markets".SLS was introduced at the height of the credit crisis to improve liquidity by allowing banks to swap mortgage to trade in securities for the obligations of the Government. It is to expire in January 2012 and not be extended or replaced. Fisher said banks were "good, early progress" in reducing their use of the program.Since the end of November, the U.K. refund lenders 19 billion pounds ($31 billion) borrowed through 185 billion-pound SLS the Central Bank, bringing the total paid to 94 billion pounds, the Bank said in its quarterly Bulletin last month.Fisher also said a move by pension funds to swap some very liquid assets for less liquid RMBS can help banks, because it gives the guarantee of the Bank can be used to raise funds on the repo market.-Editors: Fergal O'Brien, Craig Stirling
To contact the reporter on this story: Jennifer Ryan at the jryan13@bloomberg.net London
To contact the editor responsible for this story: Craig Stirling cstirling1@bloomberg.net
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