In October, we acted quickly to prevent the imminent collapse of the banking system. Soon other countries followed. Since then, we have been working with the banks' management. Royal Bank of Scotland has a new team that has been going through its books, to clean up the balance sheet, as well as reversing the old short-termism, as shown by last week's announcement on bonuses.

The task for banks is to clean up their balance sheets and rebuild for the future. The challenge, for the government and for the banks, is to do this against a background of a sharply deteriorating global economy. We need to create the certainty that will enable the banks to lend to creditworthy people and businesses, which is essential if we are to see an economic recovery.

Last month I set out a plan to help remove the remaining obstacles to increased bank lending and set the banks on a path to a safer future.