In the 11th hour, the Treasury has today announced that it will be taking action to bring stability back to the UK financial system by injecting £50billion of taxpayers' money into the banking industry.
The plan, which has been brought forward following further collapse in the financial market, is intended to protect people's savings accounts
and investments, and shelter borrowers from more rate rises, while providing liquidity for banks so that they can restructure their finances and maintain lending in the medium term.
To "ensure the stability of the system" during these extreme and unusual conditions in the market, the Bank of England will "take all actions necessary", a statement said, which will also include making £200billion available to the banks as an extension of the Special Liquidity Scheme.
has confirmed that most of the UK's biggest financial institutions have confirmed that they will participate in the Government's recapitalisation scheme, comprising of Abbey, Barclays, HBOS, HSBC, Lloyds TSB, Nationwide Building Society, RBS, and Standard Chartered.
The amount that each bank or building society will be issued is to be finalised following detailed discussions with each institution, and will appropriately reflect the risk they pose to the taxpayer's investment.
The plan has been agreed internationally and will go ahead immediately, as will an agreed proposal for increased supervision of the system, the Treasury has said. The Government has also said that it will be working closely with the financial leaders of other countries to try and bring stability back the international banking system.
Following a week of tumbling share prices and panicked savers, the rescue plan will come as a relief to many, but some analysts are saying it's too little too late, and that more needs to be done to restore confidence in the country's financial system, especially as savers worry for the safety of their deposits.
The embattled Chancellor Alistair Darling's promises that he would to "whatever it takes" to restore confidence and secure people's life savings were met with demands to know what action was actually being taken.
All over Europe yesterday, financial markets panicked as their countries' leaders stalled for a solution to the latest chapter of the credit crisis saga, threatening lenders' survival across the continent. Alistair Darling had to rush back from a meeting with EU finance ministers in Luxemburg yesterday as the situation at home took a turn for the worse.
Shares started collapsing amid news from the British Chambers of Commerce that the UK is officially in a recession, and a briefing with the BBC by three big banks – Barclays, RBS and Lloyds TSB – where the banks reportedly accused the Chancellor of dithering on a bail-out plan.
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