Banks are "ready and willing" to get behind a multibillion-pound scheme to prevent a second credit crunch but City and industry experts warned there is no guarantee the plan will kick-start lending.
The coordinated action by the Bank of England and Treasury will see an estimated £80 billion offered to banks on condition they pass it on to businesses and households in the form of cheaper loans and mortgages.
The scheme, which is due to start in the next few weeks, has received a cautious welcome while bank shares were up by as much as 6%.
However, there were warnings that the scheme will not address the core problem of companies' reluctance to borrow, particularly in the face of a eurozone debt storm that could deepen this weekend following elections in Greece.
Graeme Leach, chief economist at the Institute of Directors, said: "The funding for lending scheme helps the supply of money and the demand for it, by lowering the cost of borrowing. But the core problem remains. Companies alarmed by the euro crisis will not be eager to borrow, regardless of the cost."
And economists cautioned that banks may simply not want to lend more, even with the carrot of cheaper funding. Vicky Redwood, of Capital Economics, said: "High bank funding costs are just one challenge facing the UK economy. Indeed, these moves on their own will do little to reduce the effect of the eurozone crisis on UK exports or reduce the uncertainty facing UK companies."
In his annual Mansion House speech, Bank governor Sir Mervyn King also activated facilities for an emergency scheme that offers six-month liquidity to banks in tranches of at least £5 billion a month. The two measures are estimated to be worth around £100 billion in funding to banks.
The banking industry has been hit by higher funding costs as the eurozone troubles have escalated and have been hoarding money for fear of another worrying phase in the crisis.
The British Bankers' Association said it was "ready and willing" to get behind the moves, with chief executive Angela Knight saying the industry welcomed the news that the Bank and Government were "ready to stand with the financial sector in making more money available to fuel the recovery".
However, shadow chancellor Ed Balls was critical of the proposals, saying they "do not go far enough".