Alistair Darling, UK Chancellor of the Exchequer, has launched a discussion paper to gauge views on the need for change in how the government handles banks in trouble in the wake of criticism of its management of the run on Northern Rock.

The aim of the paper, from the UK Treasury, the Financial Services Authority and the Bank of England, is to seek opinions on "the way in which the current framework for dealing with banks in distress may be enhanced". The two main subjects for discussion are reforming the the system by which depositors in a struggling bank are compensated and where there is a risk of a bank failing, should critical bank functions be maintained and how.