Government plans bad debt bank

The government is thought to be considering plans to create a state-owned bank to accumulate all bad debt in a bid to revive the UK economy.

Under the plan, the bank would take on risky loans that currently appear on many banks' balance sheets while moves would also be made to guarantee lending to homeowners.

Prime minister Gordon Brown also called for much tighter regulation of the financial system in the future to ensure there can be no repeat of the excessive lending that led to the credit crunch.

"We must secure the widest possible transparency and the necessary renewal of trust in the banking system. That is an essential element of rebuilding the global financial system," he said.