New bailout scheme to be provided by Britain to its banks

Another portion of the government bailout will be provided to the banks in Britain so as to allow them to insure against steep losses as well as to guarantee their debt to prevent further credit crisis progression. According to some media reports rescue package will also be provided by the British government to Royal Bank of Scotland which will increase it stake in the financial institution.

The government’s comprehensive program is aimed at making credit lending available again to consumers and companies. In this regard Prime Minister Gordon Brown noted that the main problem is the resumption of lending. In October Britain already invested 37 billion pounds ($55 billion) into its banks. Brown's new plan stipulates that lenders have to identify their riskiest assets which they could then insure with the government for a fee. With that they would still be liable for initial losses.

Additionally the British Treasury is also planning to prolong its Credit Guarantee Scheme -- which underwrites debt for banks that were recapitalized by the government -- to the end of this year. Besides, the government wants to launch a successor for the Bank of England's Special Liquidity Scheme, which expires this month. The scheme allowed financial institutions to exchange their hard-to-trade assets for more liquid ones.