Banking rescue: what about me?
08 October 2008
The financial rescue plan announced by the government this morning will see a total of £50 billion of taxpayers' money be invested in the UK banking system, but questions as to how this investment will affect individuals and their money are understandable.
The banking bailout is designed to help stop people becoming overly concerned about their own funds, as it should restore some liquidity to the markets.
And, the theory is, if the government offers this boost to the sector, banks will have the confidence to lend money to each other, providing a greater level of security for their finances.
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With this security, banks should be able to lend to the public through mortgages, loans and other forms of borrowing, the government hopes.
Terry Smith, chief executive of money broker Tullet Prebon, told the BBC that the extra capital and liquidity "should stop the panic in terms of people wondering whether or not the banks are safe".
And following the announcement, shares in banks on the London Stock Exchange have begun to increase in value, indicating a certain level of confidence in the plan. It remains to be seen how successful the plan is for everyday borrowing.
