Mervyn King suggests bank nationalisation could happen
While Mervyn King, the Gov of the Bank of England, has already expressed his views regarding the UK banking sector and the resistance to increase liquidity in the marketplace, he has today been more forthright in his views. Aside from the fact the government may look to nationalise businesses which seem to go against the conditions which were allegedly agreed prior to the rescue package, Mervyn King believes that the government may even be forced to nationalise banks anyhow.
He is now suggesting that if the recession is as bad or worse than that experienced in the 1980s many more banks will suffer from liquidity problems and asset depreciation and require further assistance from the government. This may see a number of leading UK banks taken under government control leading to a very difficult marketplace.
Some observers believe this doomsday scenario is being used to smash open the door to extra liquidity from the banks with others suggesting that the sector will need more help if a quick recovery does not arrive. Whatever the outcome for the financial sector there is no doubt that there are still many challenges ahead and the banking sector will at some stage need to get the government back onside.
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