How Central Banks Target Specific Lending Channels

Monetary Policy Explained with Fexingo: Central Banks, Money Supply, and Interest Rates · Jun 8, 2026 · 10m · transcript

Episode 39 of Monetary Policy Explained with Fexingo dives into a lesser-known tool in central bankers' kit: targeted lending programs. Instead of cutting the broad policy rate, central banks can offer cheaper credit to specific sectors — think small business loans, green mortgages, or export financing. Lucas breaks down how the Bank of England's Term Funding Scheme for Small and Medium Enterprises (TFSME) worked in practice: 192 banks tapped over 190 billion pounds, directly tied to their net lending to SMEs. Luna contrasts it with the European Central Bank's TLTRO III, which…