PM hails credit crisis move

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The Prime Minister said the decision by five leading central banks - including the Bank of England and the US Federal Reserve - to inject £50 billion into the markets had been an "important step forward".

However he said that the "turbulence" created by the collapse of the sub-prime mortgage sector in the US, which triggered the collapse of Northern Rock and now threatened a global economic downturn, underlined the need for reform.

"I do believe that it is a wake-up call for the global economy," he told the Commons Liaison Committee.

"I do believe that the existing institutions are not good enough. I'm going to make it my business to try to reform these institutions to make them better able to deal with the sort of problems that we have got."

Mr Brown said that there was need for greater transparency in the banking and financial sector and he called for reform of the credit rating agencies.

"I do believe that the lessons of this summer have shown that you need a better early warning system in the global economy, you need greater co-operation between the international authorities to head off difficulties."

Each of the banks announced that they would pump additional reserves into their respective systems in a bid to ease an impending New Year freeze in wholesale money markets.

The move created an initial wave of cheer on stock markets in London on Wednesday and on the other side of the Atlantic.

The Bank of England said the announcement was a measure to "address the elevated pressures in short-term funding markets".