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Bank to mount undercover bail-outs
30 January, 2008
It has been suggested that the Chancellor's plans to strengthen the country's financial framework will give the Bank of England the power to mount secret rescue operations.
Published by the tripartite authorities and launched by the Chancellor, the consultation document has been primarily designed to prevent another crisis on the scale of Northern Rock.
The document has outlined key measures to reinforce the existing system including the provision of 'effective compensation arrangements.'
In addition, it is claimed that Darling will also prioritise any Bank of England loans, allowing to jump the queue of creditors to be first in line.
Darling said: "The Government is determined that its response is proportionate and appropriate and will therefore consult actively on these proposals, seeking discussions with financial institutions, consumer representatives and counterparts from across the world, to ensure that the final arrangements are effective and deliver the five objectives set out here.
The proposed legislatory changes will now enter into a twelve-week consultation period to determine the outcome.
The news comes as the Treasury confirms that Mervyn King's position as Bank of England governor is secure for a further five years - despite the criticism he incurred as a direct result of the Bank's handling of the Northern Rock fiasco.