The financial services providers operating in the UK should not be allowed to go bust, one sector commentator has warned.
Michael Baxter, economist at Defaqto, said that if more bailouts - which may come from taxpayers' funds - were needed to resume bank lending then there was "no choice on the matter".
"[The government] can't force the banks to lend and ultimately they might have to take measures to try and inject more money into the system somehow," he explained.
Mr Baxter added that this may be achieved through the Bank of England purchasing different bonds.
The Bank's monetary policy committee announced today (January 8th) its decision to cut the base rate of interest to 1.5 per cent.
Meanwhile, it has been widely reported that Alistair Darling, chancellor of the Exchequer, will not be ruling out the possibility of further bailouts to the banking sector if it is deemed necessary to the recovery of the economy.
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