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The Financial Services Authority (FSA) is to extend the guarantee on cash deposits up to £35,000 in an effort to restore confidence in the UK banking system.
As reported by Bloomberg, chancellor Alistair Darling commented on the shift as an improved foundation for a new orderly process in the industry-financed insurance system - news that will be if interest to business start-ups.
With further government proposals likely to be raised in parliament next week which could affect a company formation, Chancellor Darling said the new system would provide a guarantee for Northern Rocks depositors.
Previously savers were guaranteed 100 per cent of the first £2,000 and 90 per cent of the next £30,000 worth of deposits in a bank or building society account.
Prime minister Gordon Brown has stated that the government will take "no risks" on economic policy, it is reported.
"The worlds latest financial turbulence has been a wake-up call for every financial system in every part of the world," he said.
Consumers queued for three consecutive business days last month in order to withdraw their funds after Northern Rock revealed that it had requested emergency financing from the Bank of England, the news agency reports.
FSA retail markets managing director Clive Briault has said that consumer confidence is important during the current time of market instability.
The news comes as the latest Halifax house price index reveals that total wealth in the UK is valued at £6 trillion with house price increases and mortgage debt believed to have pushed the value up in recent years, the BBC reports.
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