$100bn UK bank bailout announced

21 April 2008

Britain's banks are to receive an injection of liquidity worth around $100 billion, due to the apparent sharp decline in the national housing market.

In parliament today, UK chancellor Alistair Darling set out the terms of the government's plan - which aims to improve the revenue streams of mortgage lenders.

Home loans products are to be swapped for 'safe' government bonds, which can then be traded on the money markets.

It is hoped that this will allow lenders to cut their mortgage rates - keeping repossessions down.

Testifying to the seriousness of the situation, a source told the Times that the $100 billion bonds issue could double in future if it needed to.

Mr Darling said: "We believe that this will be an essential step in trying to get the financial market stabilised.

"That in turn will help the mortgage market too."

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