High street banks are expected to lobby the Bank of England today to expand the special liquidity scheme as the financial markets are still frozen, according to a report.
The Guardian claims the banks are keen to extend the scheme, which allows them to swap mortgage-backed assets for government bills, which can be easily traded.
The original scheme, estimated to be worth £50 billion, is due to end in October but with the financial markets still sluggish, banks want it extended.
Banks are due to meet with the BoE for a routine meeting today and the Central Bank refused to comment on what will be discussed.
It is thought the banks would also like to see an expansion of the type of asset that can be swapped to open up the scheme further.
The special liquidity scheme was drawn up in April following the collapse of Bear Stearns in the US.
The scheme aimed to get money moving between banks again, after the subprime crisis led to a loss of confidence in banking and financial institutions stopped lending to each other.
It allowed banks to swap high quality yet illiquid assets ones that are mortgage-backed for Treasury bills, which could easily be traded on the financial markets.
The risk of loss remains with the banks, and the value of the asset swapped must be higher than the Treasury bill. The bank also has to pay a fee for the service.
At the time, BoE governor Mervyn King said: "The Bank of England's special liquidity scheme is designed to improve the liquidity position of the banking system and raise confidence in financial markets while ensuring that the risk of losses on the loans they have made remains with the banks."