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BoE's Tucker confident lending scheme will help UK

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TOKYO, Oct 12 (Reuters) - Bank of England Deputy GovernorPaul Tucker said on Friday that he was confident the centralbank's new scheme to boost bank lending would help lowerinterest rates faced by businesses and households.

Speaking at a banking conference in Tokyo organised by theInstitute for International Finance, Tucker said he had been"pleasantly surprised" by the number of banks and buildingsocieties that had signed up to the BoE's Funding for LendingScheme (FLS) since it launched in early August.

"We observe the fall in funding costs that this has helpedto bring about. I am reasonably confident this will be passed onto the real economy over time," he said.

If the FLS is a success, some BoE policymakers have said itwould reduce the need for it to buy further government bondsunder its quantitative easing scheme.

"There are no silver bullets," Tucker said. "Of course thereis weak demand for credit but where we can remove impediments tothe supply of credit we should do so."

Tucker also said that simple rules for bank regulation - asadvocated by his BoE colleague Andrew Haldane - may not beenough to stop risky behaviour.

(Reporting by David Milliken; Editing by Chris Gallagher)

((chris.gallagher@thomsonreuters.com)(81-3-6441-1842))

Keywords: IMF ECONOMY/TUCKER

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