Banking: Financial Stability

My Lords, I am grateful to the noble Lord for identifying the key principle behind this part of the government proposals, the credit guarantee scheme, which is about increasing liquidity. That is why the Government are offering for an interim period a guarantee to assist in refinancing maturing debt. The scheme has a limited timescale. It is debt which with a guarantee will cover instruments for up to three years. However, we anticipate that it will create for banks a degree of security, beyond what we have indicated with regard to retail depositors, for lending and loans, which are much more substantial and are in many ways critical to the liquidity of the system. The principle we are following is exactly the one identified by the noble Lord and we will be able to develop the details in due course, but I want to emphasise the fact that this is related to comparatively short-term debt and is about tackling the crucial issue of bank liquidity.