Government Pledges Support For UK Financial System
It is not only the financial system in the UK which is facing a tough time at the moment, banks and loan companies around the world are now feeling the full effects of the credit crunch.
Just last week the US Congress finally approved a $700 billion rescue plan for the banking system in America, by buying out the bad debts on secured loans and mortgages in exchange for a share of the company, in order to restore some liquidity to the markets. Iceland ceased trading on its stock exchange as it struggles to rescue its banks and other European countries face similar problems with their financial systems.
In his first speech since the return of Parliament from the summer break, Alistair Darling, the Chancellor of the Exchequer, made the long awaited announcement that the Government in the UK would do whatever it takes to restore financial stability to the banking sector and in turn help return some level of confidence to the struggling mortgage and loan markets.
He announced in his speech that as part of the plan, the Bank of England would inject and additional £40 billion into the banking sector to ease the current liquidity issues, in a move similar to that in the US and also that further capital injections would follow as required. He also said that various countries needed to work together to solve the current crisis.
He said “I have always been clear that each country needs to do whatever is needed to deal with its own particular circumstances. However, I also believe that wherever it is possible to do so, countries should work and act together to maintain stability. I have made it clear that the Government stands ready, with the resources and the commitment to do whatever is necessary. Our priority, at home and abroad is to bring stability to the financial system, ensure depositors and savers are protected and defend the interest of the taxpayer.”
