Banks should be given "fiscal incentives" to lend to small businesses, according to the Governor of the Bank of England. During a heated debate with MPs yesterday, Sir Mervyn King said the Treasury should have forced the state-backed Royal Bank of Scotland and Lloyds Banking Group to lend more. According to The Guardian, King said that the buying of government bonds in the latest round of quantitative easing, would not necessarily encourage banks to lend to small businesses. 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. Fiscal incentives can persuade banks to lend to SMEs, or use of direct ownership of the biggest lenders.”