Banking: Financial Stability

My Lords, while joining in the general welcome, I should like to ask a few questions of detail about the guarantees on bank lending and, I assume, by corollary, the counterparts—wholesale inter-bank deposits. As the Chancellor’s Statement made clear, while the underlying problem is one of bank capital and solvency, the immediate crisis is one of liquidity, and that is a question of confidence. Therefore, I believe that the third item—that of underwriting loans—may be the most important aspect of the Statement. Are the loans to be guaranteed just loans and deposits between banks—inter-bank funding? Secondly, what is the definition of ““new””? As loans and deposits roll over, will they automatically become new and therefore will the whole of inter-bank funding become new in a period of time? Thirdly, how has the amount of £250 billion been estimated? What percentage of inter-bank funding does that represent and how quickly do the Government believe that it will be used up? Fourthly, if all new inter-bank deposits and funding are to be guaranteed, how do the Government intend to stop international inflows into the UK in order to participate in the guarantees for deposits made against bank loans?