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Darling pledges to support banks Darling pledges to support banks
(30 minutes later)
Chancellor Alistair Darling says the government will do whatever necessary to ensure the stability of the financial system.Chancellor Alistair Darling says the government will do whatever necessary to ensure the stability of the financial system.
He said that would include action to support the banking system as a whole as well as supporting individual banks.He said that would include action to support the banking system as a whole as well as supporting individual banks.
The chancellor told MPs that European countries needed to work more closely together on responding to the crisis.The chancellor told MPs that European countries needed to work more closely together on responding to the crisis.
His statement came as stock markets worldwide plunged on concerns about the health of the banking sector.His statement came as stock markets worldwide plunged on concerns about the health of the banking sector.
Despite pledges being given by some European Union countries, Mr Darling stopped short of guaranteeing all bank savings and called on EU members to co-ordinate action.Despite pledges being given by some European Union countries, Mr Darling stopped short of guaranteeing all bank savings and called on EU members to co-ordinate action.
"When member states take unilateral action, it does have a knock-on effect," he said."When member states take unilateral action, it does have a knock-on effect," he said.
World stock markets fell sharply during trading on Monday. Stocks slide
The FTSE 100 fell 7.36% to 4,613.80 points, while in New York the Dow Jones industrial average fell 4.73% to 9,836.83 - sinking below the key 10,000 point level for the first time in four years. World stock markets fell sharply during trading on Monday. There can be no sustained recovery until the markets are in the clutches of utter despair Robert Peston, BBC business editor class="" href="http://www.bbc.co.uk/blogs/thereporters/robertpeston/2008/10/how_close_to_capitulation.html">Read Robert's blog
The falls follow a series of events including:
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  • The German government was forced to salvage a 50bn euro ($69bn; £39bn) rescue package for mortgage provider Hypo Real Estate
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  • Denmark, Sweden and Iceland both increased the amount of protection depositors in their banks receive
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  • Iceland said its banks had agreed to sell some of their overseas assets and the government was also trying to persuade trade union pension funds to repatriate some of their funds
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  • Central banks across Europe - including the European Central Bank and Bank of England - offered more than $74bn to banks in short-term loans in separate efforts aimed at trying to making cash available for the banking sector
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  • EU leaders issued a joint statement saying they would take the necessary measures to protect both the system and individual depositors.
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  • Shares in Fortis were suspended, a day after France's BNP Paribas said it would take a 75% stake in the Benelux bank.
The FTSE 100 ended down 391 points, 7.85% at 4,589 - its worst percentage fall since the 1987 stock market crash.
In New York the Dow Jones industrial average fell 4.65% to 9,846 points - sinking below the key 10,000 point level for the first time in four years.
The falls follow a series of events including:
  • The German government was force d to salvage a 50bn euro ($69bn; £39bn) rescue package for mortgage provider Hypo Real Estate
  • Denmark, Sweden and Iceland increased the amount of protection depositors in their banks receive.
  • EU leaders issued a joint statement saying they would take the necessary measures to protect both the system and individual depositors.
  • Iceland said its banks had agreed to sell some of their overseas assets and the government was also trying to persuade trade union pension funds to repatriate some of their funds.
  • Central banks across Europe - including the European Central Bank and Bank of England - offered more than $74bn to banks in short-term loans in separate efforts aimed at trying to making cash available for the banking sector
  • Shares in Fortis were suspended, a day after France's BNP Paribas said it would take a 75% stake in the Benelux bank.
Emergency meetingEmergency meeting
Mr Darling told the Commons that an emergency meeting would be held in Luxembourg on Tuesday, where he hoped that all member states would agree to act together to avoid confusion. Mr Darling told the Commons that an emergency meeting would be held in Luxembourg on Tuesday, where he hoped that all EU member states would agree to act together to avoid confusion.
The chancellor said that 98% of UK bank accounts will be covered by deposit protection once the increase in the amount of bank deposits guaranteed by the government takes effect on Tuesday.The chancellor said that 98% of UK bank accounts will be covered by deposit protection once the increase in the amount of bank deposits guaranteed by the government takes effect on Tuesday.
The threshold has gone up from £35,000 to £50,000 and Mr Darling said that the Financial Services Authority was looking at whether to increase this further. The threshold has increased from £35,000 to £50,000 and Mr Darling said that the Financial Services Authority was looking at whether to increase this further.
He also said that the Bank of England would inject a further £40bn into the financial system to help ease the credit crunch.