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13 October 2008

Implementing support for the banking system

The Government is today taking decisive action to ensure our banking system remains on a sure footing in the face of continuing and exceptional instability across the world’s financial markets.

The Government is doing this by implementing the comprehensive set of measures announced last week, to make commercial investments in British banks and building societies to put them back in a sound position and support the long term strength of the banking sector and wider economy.

These actions will also help to build confidence and security in our banking system and provide greater protection for consumers. Customers can continue to use all of their banking facilities in the normal way.

By providing banks with increased levels of capital - through the purchase of shares - and by introducing a guarantee scheme to encourage lending between banks, these actions will restore confidence in the banking system and ensure banks are more willing to lend to individuals and businesses. Because the agreements the Government has made with banks will be priced on commercial terms, taxpayers will be rewarded for providing this support to the banking system.

Notes for editors

1. For full technical details of today's announcements, see Treasury statement on financial support to the banking industry

2. For more information for consumers, visit the 'Moneymade Clear' website of the Financial Services Authority.

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