The Securities Industry and Financial Markets Association is applauding the Bank of England’s latest effort to ease credit conditions.

SIFMA and its affiliate, the European Securitisation Forum, expressed support for the Bank of England’s Special Liquidity Scheme, which will allow banks to swap high quality illiquid assets for Treasury Bills. Each swap is for a period of one year and may be renewed for a total of up to three years.

“The SLS is the right action to take given current market conditions. It will provide a significant amount of liquidity to UK financial institutions and will boost confidence in the sector. It’s effective and decisive and serves an important function as an additional source of cash for the wholesale funding of assets on banks’ books,” said Karsten Moller, senior managing director and head of Europe and Asia for SIFMA.

“This is not intended to be a replacement for securitisation,” added Rick Watson, head of ESF. “The three-year window provides additional funding flexibility to lenders while simultaneously giving securitisation investors the time they need to address issues such as: secondary supply overhang, spread/price volatility and quantification of US subprime sector loss.”