Franky on Finance

Chancellor Alistair Darling aims to raise the amount of money protected from the current £35,000 to a new ceiling of £50,000.  Savers who lose money when a bank goes under will be given compensation within a week, instead of months.  However, banks said making them pay up-front would divert vital capital away at a time when they were already under pressure from the credit crunch.  So instead, the new scheme will borrow money from the public sector, if necessary, to enable quick payments.  The Chancellor believes more generous protection will cut the risk of panic if a bank is rumoured to be in trouble.