Up and down the country families and small businesses are worried and anxious about their futures. I know and understand this.

Good strong banks are essential for every family and every business in the country.

And extraordinary times call for the bold and far-reaching solutions that the Government has announced today.

The problems that started in America have now hurt every banking system in every continent of the world.

The global financial market has ceased to function, putting in danger the necessary flow of money to businesses and families on which all of us depend in our daily lives.

Our stability and restructuring programme is comprehensive, specific and breaks new ground.

The programme is designed to restore confidence and trust in the financial system and – more than that – to put the British banking system on a sounder footing, and to build strength for the future so that it can support jobs and prosperity across our economy.

We have to do more than provide liquidity or buy up assets, and when we have to meet immediate and long term challenges no one measure alone will be sufficient.

So we have taken a comprehensive approach.

This is not a time for conventional thinking or outdated dogma but for fresh and innovative intervention that gets to the heart of the problem.

We are taking three steps:

First, to address the immediate issue of flows of money between banks, the Governor of the Bank of England is extending and widening the provision of short term liquidity. Loans under the special liquidity scheme will be increased from £100 billion to at least £200 billion and the bank will also now bring forward proposals for a permanent facility.

Second, to ensure the long-term health of the British banking system, we are today offering to support banks in raising additional capital by investing directly through preference shares - or at their request by assisting them in raising ordinary shares. The largest banks have committed that they will increase their capital by £25 billion which we will make available to them if they so wish. In addition, we will provide at least another £25 billion. We, the bank and the FSA are determined that UK banking should be strong and secure.

And, thirdly, for a fully commercial fee we will provide guarantees to allow banks to raise their own money in the market and so resume normal lending. We expect to provide at least £250 billion of guarantees.

As the people of Britain will expect, there will be strings attached and conditions to be met.

We will insist on banks' credit lines to SMEs being maintained on a normal commercial basis. We must also be satisfied, in the terms of our agreements, about executive remuneration dividend payments and about improvements in supervision.

All these are investments made by the government which will earn a proper rate of return for the taxpayer.

These measures provide the best way of providing long term security for depositors and savers. Along with the half a percentage point interest rate cut announced by the Bank of England today, they will assure people that all action is being taken to deal with the challenges we face.

Out of this restructuring I believe we can look forward to a fairer and more stable financial system.

Countries are tested in difficult times. These problems started in the US. They are having a big impact on our system but I believe that the decisions we have taken today, with the conditions we have set, are the right decisions to allow us to come through this and to help rebuild financial stability.
 
     
 

Gordon Brown