the central banks were originally designed a hundred odd years ago when the when the great british bank of england was reformed started over it was given the task that when there were when there were panics in the market at the central bank was to step in and lend the money at high rates of interest against sound assets and yet through the package that was what they were supposed to do and the bank of england for a while done a brilliant job at it one hundred twenty five fifty years ago that's what the senate the central bank was supposed to do that's all they should do if you ask me our central bank was set up with the mandate to make sure we had a sound currency they wandered away from that in spades in fact they've done their best to destroy a sound concept of the past few decades if you want to start over you say ok well have a central bank all you can do is in times of panic you step in you take sound collateral out of the sound collateral from people you think will so you charge them high rates of interest and you get through the panic if people come in with an unsound collateral or people w

. >> british banks would be at risk because of their loans to eurozone banks, businesses, and people. the bank of englandas developed a contingency plan to protect british banks. >> the british banks are very international. the british banking system is a very large portion of our economy. if the guarantees of the government has given were called, we are the most indebted country in the world. >> however much we may congratulate ourselves, we cannot protect ourselves completely were the worst to happen over there. >> you are lucky newsday on the bbc. still to come, a distant world. the changing face of britain. >> the olympic flame is on its way to the u.k. following the handover in athens. a quick look at what is making front-page news around the world. there are denials there has been a run on deposits. they assured customers things are safe. is thek's fat loot headline. the initial share offering is just hours away. the advertising industry is skeptical of the $100 billion valuation. the trading losses sustained by jpmorgan chase have surged. they are estimated at $3 billion rather than the initial $2

the bank of england and treasury have developed contingency plans to protect british banks which wouldrobably involve guaranteeing their debt. >> the british banks are very international. the british banking system is a very large portion of the economy, much more than other economies. if the government -- if the guarantee for those banks went cold, we are without doubt the most indebted country in the world. >> however much we in the u.k. may congratulate ourselves for staying out of the eurozone, we cannot protect ourselves completely from the worst of the worst that happens over there. >> still to come, counting down to the dubin the -- to the jubilee. >> the torch is on its way to the u.k. following the handover from athens. >> a quick look at what is making front-page news around el paisld -- spain's denies that they have had a run on their funds. initial share offering is a few hours away. the international health tribune says that jpmorgan chase is estimated at $3 billion loss. the "financial times" reports -- saudi arabia has banned all reporting agencies. and "the *" pays trib

banks slow up their acquisition, thereby producing more money available to british businesses and small businesses. does the government agree with that recommendation and will they work with the bank of england to implement it as soon as possible? >> i think the gentleman raises an important point. this is a difficult issue to get right. here we are rightly discussing two problems. one the need for growth. the other, the need for financial stability and making sure you're safe with the head winds of a potential eurozone storm approaching. i think the best approach is to work hand in glove with the bank of england to get that balance right. that's what the government will do. >> i'd like to congratulate the prime minister on his stamina. he has done three summits in two days on two continents. can i reiterate the points made, we have to -- what we need, and it's essential that we have a review of nato's strategy with a full commitment by all its members. >> i'd like to thank my friends. that will be enough summits for some time. the g-20 will soon catch up with us. what he says about nato is right. we need the reviews by all nato countries to go through their budgets to work out what is actua

so there's been a lot of activity from the bank of england over the last period, quantitative easing. it's immensely important to the british economy. i think it's unlikely that would have been possible if the government at the same time hadn't been kind of dealing with this deficit and debt issue at the same time. >> that's absolutely right. sometimes what people say to us why not just go easy on the public spending decisions. why not go easy on the deficit and the debt. if we did so you could see any rates go up. and for every 1% on interest rates, basically hits the typical family mortgage by about 1,000 pounds a year. so it would be totally self-defeating which is why i think we need to stick to the plans we set out. tough and difficult though those are. we're going to take a couple of questions from the press, if that's okay. mr. robinson from the bbc. >> thank you very much, deputy prime minister. nick robinson from bbc news. europe is turning its back on austerity. do you fear that britain is beginning to turn its back on austerity? if growth is a priority, why are you forcing him to back house of lords reform and mr

central bank with a gold standard only keeps a fraction of the gold necessary to back the entire money supply. indeed, the bank of england was famous for keeping a thin film of cold, the british central bank only kept a small amount of gold and relied on their credibility to stand by the gold standard under all circumstances to -- so that no one ever challenged them about that issue but if -- for whatever reason if markets lose confidence in your willingness, in your commitment to maintaining ethical standard relationship you can get a switch of attack. this is what happened in 1931. speculators lost confidence that the british pound withstand cold. like a run of bank they all but their pounds. give me gold. did not take them very long before the bank of england was out of gold. there was a lot of financial volatility created by this attack and the gold standard. there is a story told that a british official, a treasury official was taking a bath. an aide came running in saying we're of the gold standard. and he said tonight to know we could do that. [laughter] they could command they had to. they had no choice because there was suspected of attack on the pound. moreover, and

banks float up their acquisition of buffers, thereby producing more money available to british businesses and small businesses. does the government agreed with that recommendation and will they work with the bank of englandto implement as soon as possible? >> i think the honorable gentleman raises an important one. this is a difficult issue to get right because here we are rightly discussing to problems. one, the need for growth, the other the need for financial stability and making sure you are safe with the headlines of the potential eurozone storm approaching but i think the best approach is to work absolutely hand in glove with the bank of england bank of england and the financial services authority to get that balance right. that's what the government will do. >> i congratulate the prime minister on his stamina. i would hope by the evening he would've done three summit in five days and two continents. >> here, here. >> but can i reiterate the point made by the member of the coventry? if we have to press on nato members the conclusion of the campaign in afghanistan is no justification for cutting defense budgets. what we need, and it's essential we have a review of nato strategy with a full-blooded c

bank of england has said it should've done more to prevent the banking crisis. king said that the regulatory system has not worked properly. he says the british government should speed up reforms for the banking industry. news corp.'s board of directions is supporting rupert murdoch as company chairman despite the british parliamentary report into phone hacking that says he is not fit to run an international company. now the business news. ecb not likely to put up interest rates today? >> that's right. twice a year the ec council meets in a city outside frankfurt. today it is topical, given all the information we have seen on unemployment figures. the country is struggling. we'd have mentioned the interest rate of 1%. not expected to see any change. another area where we don't expect to see changes on bond buying. that is something the spanish government in particular would like to see a the ecb jump back into because they have had to pay extremely high interest rates. if the ecb were seen to be buying bonds, that would bring down interest rate. in has in the past, but it has gone back up again after a few days. >> samsung is launching a new

banks slow up their acquisition of buffers. thereby producing more money available to british businesses and small businesses. does the government agree with that recommendation? well they work with the bank of england to implement it as soon as possible? >> this is a very difficult issue to get right. we are discussing two problems. one is the need for growth. the other is the need for financial stability and making sure you are safe with the head winds of a eurozone storm approaching. the best approach is to work hand in glove to get that balance right. >> i congratulate the prime minister on his stamina. 3 summit in five days on three continents. but can i reiterate the points that were made? we have to impress on nato members that the conclusion of the campaign in afghanistan is no justification for cutting the defense budget. it is absolutely essential that we have a review of nato's strategy with a full blooded commitment by all its members. >> i want to thank my honorable friend for his remarks. by the end of tonight, that will be enough summits for quite some time. what he says about nato is right. we need reviews by all nato countries to go through their budget and work out why it is necess

british pound i believe it's a one hundred ninety three he pocketed a billion pounds. and as a result of that but it was one guy with a very large credit line taking on the bank of englandhere you've got hundreds of hedge funds better in on this trade with the buying power in the you know what's called a trillion dollar buying power potentially so that how risky is that one hundred forty billion dollars market capitalization of j.p. morgan stock could this stock go to zero as we saw with lehman brothers i don't know about zero but i think it can go a lot lower j.p. morgan has a lot of problems they've got a lot of legal contingencies litigation against them they've got a lot of other questions about their silver positions they've been sort of immune from scrutiny and from any kind of deep look because there's been so much going on in bank of america and. citi group and now they make one mistake that they have to admit to and hopefully some people will be taking a deep dive my disappointment is that you've got one auditor back there with m.f. global with j.p. morgan with bank of america and they don't seem to be doing their job at all peter have you see francine you ment

banks float up their acquisition of buffers, thereby producing more money available to british businesses and small businesses. does the government agreed with that recommendation and will they work with the bank of englandent as soon as possible? >> i think the honorable gentleman raises an important one. this is a difficult issue to get right because here we are rightly discussing to problems. one, the need for growth, the other the need for financial stability and making sure you are safe with the headlines of the potential eurozone storm approaching but i think the best approach is to work absolutely hand in glove with the bank of england bank of england and the financiaservices authority to get that balance right. that's what the government will do. >> i congratulate the prime minister on his stamina. i would hope by the evening he would've done three summit in five days and two continents. >> here, here. >> but can i reiterate the point made by the member of the coventry? if we have to press on nato members the conclusion of the campaign in afghanistan is no justification for cutting defense budgets. what we need, and it's essential we have a review of nato strategy with a full-blooded commitment t

bank has been relatively firm in saying they will not do that, how do you expect british authorities -- how do you recommend they thank you very much to all the authorities, the treasury, the bank of england, and the financial stability authority for their good spirit in which this work has been concluded. i am sure you will have some pressing questions. for those questions that are highly technical and complex, i have the support of the mission chief sitting next to me. >> i just wanted to have a question about are there other options to boost demand for credit. >> which drops are you talking about? the latest one? >> yes. the bank of england has always been very opposed to doing things like ltros and has said repeatedly they do not think they should do that. given that the bank has been relatively firm in saying they will not do that, how do you expect british authorities -- how do you recommend they should actually go ahead with doing this -- meeting its recommendation? >> my understanding from the team -- i will let my team express additional views. they cannot carry the risk on their own balance sheet. it would be with the bank of england acting as an agent on behalf of the treasury.

bank of england will release the quarterly report. we'll bring the new as it hits the wire. 10:30 british time. >> london time. >> okay. we won't even get to gmt. we're off the session lows. z t z xetra dax. >> german bonds down 1.7. still below the 1.5% level. 10-year gi 10-year gilts jumped down. italy is down to 6.06% and spain is at 6.38%. >> meanwhile greek political leaders are meeting again after last-ditch talks faired. that the head of the international monetary fund has admit there's a chance greece could leave the eurozone. an exit could be in can cards. she said it would be messy but the imf had to be technically prepared. >>> we're now joined by jury again michaels least economist for citigroup. jurgen, would you like to respond to the uk data and talk a little bit about the potential for stronger growth in that region despite everything that's happening in the eurozone? >> i think in the uk you always have some near-term disruptions there, but i think overall, the pressure of inflation is likely to come down over time as the appreciation comes through and the economy looks rather week. turning to europe,

british authorities should actually go ahead with doing this meeting this recommendation? >> well, my understanding from the team that i will let the team express additional views. it could not be done by the bank of england carrying the risk on the own balance sheets. it would be the bank of england acts as agent on behalf of the treasury. so that's the approach that would be acceptable. is that right? >> that's absolutely correct. what we're trying to get at over here is that high funding costs are constraining the credibility to the economy, and so in the context, any policieses that lower the funding costs would be very valuable. the way these are designed should be specific will to u.k. circumstances. and as managing director just said, and as we said in the draft, the point is to utilize the government's balance sheet to do this so the instruction would be for the bank proposing is this is pursued the instruction would be that the bank would act as the agent also the government. i think -- the initial point i would note over here. there has been experience with these schemes here in the u.k. in the past. the sgc and so on. it's a a matter of designing schemes that are appropriate for the u.k. circum