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Chancellor renews pledge to do “whatever it takes” for financial stability

The Chancellor Alistair Darling has repeated the Government’s pledge to do “whatever it takes” to restore financial stability.

Speaking in the House of Commons this afternoon, he highlighted the need for European Union member states to work closely together to produce a co-ordinated response to the crisis and warned that unilateral actions had a “knock-on” effect on other countries, in what is likely be read as a criticism of the Irish and German governments’ actions to guarantee deposits.

Darling hinted that the Government might be prepared to further increase depositor protection in line with other EU countries, but said it would be irresponsible to speculate on future policy.

He said: “All practical options must remain open to us.”

The Chancellor said he had met with FSA chairman Adair Turner and asked him to put forward further recommendations for how to improve regulation, including additional capital and liquidity measures as well as ways of monitoring remuneration structures.

Darling said he would be meeting with other EU finance ministers to discuss stability and depositor protection in Luxembourg as well as with the G7 and International Monetary Fund in Washington.

The Chancellor reminded Parliament that the Bank of England is set to inject a further £40bn into the markets said the bank is willing to further increase injections of liquidity as necessary.

Conservative Shadow Chancellor George Osborne renewed his party’s pledge to work with the Government to bring about financial stability.

But he said the role of the Bank of England providing unlimited liquidity to the markets was ultimately unsustainable.

He said: “The Bank of England is becoming not just a lender of last resort but the lender of only resort.

“Does the Chancellor agree with me that in the medium, term and the long term that is unsustainable?”

Liberal Democrat Shadow Chancellor Vince Cable said the UK Government would be forced to offer the same depositor guarantees as its European counterparts and suggested recapitalising banks with a form of partial nationalisation.

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