After last week’s worrying stock market plunges, the news was followed by today’s positive upward trend across global markets where buying increased, thanks to low prices and improved market confidence, with hopes that conditions will continue to improve over the coming weeks.

Following plans last week by the UK and European governments to safeguard banks by injecting extra cash to improve liquidity, the US government is set to announce similar plans today, expected to invest £140 billion in exchange for stakes in major US banks, including Goldman Sachs and Morgan Stanley. US President George W Bush will make the announcement before US markets open later.

Unlike the UK where banks can choose whether to accept government help or continue to raise funds on their own, all US banks will be expected to take part in the scheme.

Last week, European governments pledged over €1 trillion to assist the continent’s banks, and the UK Government launched a plan to ensure banks’ liquidity, promising 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 the wider economy.

To find out more about the new Special Liquidity Scheme, Click Here: Banks Welcome £50bn Government Bail Out

The first implementation of the Special Liquidity Scheme was the Treasury’s announcement yesterday that it would invest £37 billion in RBS as well as HBOS and Lloyds TSB once they merge, in exchange for shares, effectively nationalising them.

The British Bankers’ Association welcomed the move, saying it should go some way to restoring stability to the market.
 
“While important for the three banks in question it is also an essential element in getting the inter-bank lending market moving, although it will take a little time for these measures to work through,” said the BBA.

“We are pleased that other governments in Europe and elsewhere will now follow the lead taken by the UK. We also hope taxpayers need to hold a stake in our banks for as short a time as possible.”

To find out more about the plan, Click Here: Government Nationalises RBS With £37 Billion

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