However, Mr King said that he thought that lending would have fallen if the action had not been taken and denied waiting for too long before agreeing on taking the step of a further injection of cash.
Giving evidence to the Treasury Select Committee, Mr King said: "I can't guarantee that it means that bank lending will rise, but what I do believe is that it won't fall as far as it might otherwise have done,"
"I think the action will make a difference to the amount of lending, but it certainly doesn't guarantee that lending to the real economy is positive.
"Only the banks are in a position to assess credit risks for SMEs. What we have to do is to find ways of giving incentives to the existing banks in order to lend more."
£200bn had already been pumped into the economy in 2009, so this second round of quantitative easing, or QE, has been dubbed QE2. When asked why the Bank had waited for so long to incrase its QE programme.
For more information, please contact Glazers, Chartered Accountants London or visit www.glazers.co.uk
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