UK - The government's plan to shore up the battered UK banking sector with a £50bn (US$87.2bn) emergency share capital package and a further £450bn of loans and guarantees to boost liquidity has been well-received by the pensions industry.
He said guarantees on bank debt would hopefully free up a secondary market for securities, which would provide increased liquidity in many markets. This, he said, would be of greater benefit to the economy and pension funds than upward movements in equity prices.
"Banks need to start lending to each other again. The three-year government guarantee should provide secondary market liquidity."
Eight of the UK's largest financial institutions - high street banks and building societies - will be increase their Tier 1 capital by a total amount of £25bn, in exchange for preferential or ordinary shares. A further £25bn of share capital has been made available at the request of institutions.
The government also extended and widened the short term funding available under the Special Liquidity Scheme to £200bn from £100bn at present and will provide a 36-month guarantee against new short and medium term debt issuance, which it said it expected to come to a further £250bn.
Speaking at a press conference this morning, UK prime minister Gordon Brown said a strong banking sector was "essential for […] every business in the country" and the current "extraordinary times" called for the "bold and far reaching solutions" on offer.
He added: "Our stability and restructuring proposal is comprehensive, specific and breaks new ground. It is designed to restore confidence and trust in the financial system, and more than that, to put the British banking system on a firm footing."
Brown said the programme had been developed in conjunction with the Financial Services Authority and the Bank of England for a number of weeks and the British bail-out would have "strings attached".
The Confederation of British Industry (CBI) said it welcomed the measures.
John Cridland, deputy director-general, CBI, said: "British business is facing a freezing of bank finance. Many companies need this action to keep investment and working capital flowing."
Paul Niven, head of asset allocation at F&C, called recent developments in the US and UK "a new era for global banking" in which states would gain a level of control over bank governance, pay, and lending practices.
He said: "Regulation will increase markedly and controls on all elements of banking practices will rise. The UK has set out a model which shows the banks having to bow to the State in terms of national versus shareholder interest.
"The new model for capitalism has been set out. Whether the sums involved and scale of plans are sufficient remains to be seen."
The Bank of England, in conjunction with the European Central Bank (ECB) and the US Federal Reserve has taken the "unprecedented joint action" of cutting interest rates by 0.5%
The Bank of England cut rates earlier today from 5.0% to 4.5%, while Fed reduced rates from 2% to 1.5% and the ECB cut European interest rates from 4.25% to 3.75%.
The FTSE 100, which dropped sharply from 4,605.22 to 4,245.29 in early trading, initially responded positively to the news, hitting 4,654.18, but slumped back to around the 4,400 mark at the time of writing.
The Next Generation Pensions Committee is on a mission to promote and encourage younger voices in the industry. Kim Kaveh looks at its key objectives
This week's top stories included an analysis finding the cost of equalising guaranteed minimum pensions in schemes could hit FTSE 100 profits by up to £15bn.
Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.