Now several of the world's major banks have taken the dramatic step of announcing a coordinated emergency interest rate cut.

ELEANOR HALL, PRESENTER: Now several of the world's major banks have taken the dramatic step of announcing a coordinated emergency interest rate cut. The European Central Bank, the US Federal Reserve and the Central Banks of Britain, Canada, Sweden and Switzerland have all reduced interest rates.

The British Prime Minister Gordon Brown began his day selling the details of his Government's massive bank bailout plan but the markets were not buying it. Shares on the London exchange crashed 7 per cent at one stage and the European markets were not any more encouraging.

In London Phillip Williams reports.

PHILLIP WILLIAMS, REPORTER: A new dawn in British banking. The headlines reflected the deep unease, the hope this the government's plan was big and brave enough to calm everyone. Big it was. More than $700 billion dollars, $120 billion direct equity investment in the banks, a kind of mini nationalisation. And a somewhat open-ended promise of another $600 billion liquidity. If the markets can't provide the cash the taxpayers of Britain will.

GORDON BROWN, BRITISH PRIME MINISTER: This is radical action across the system; the restructuring of banks under the conditions set down. A tough deal for everybody but the right deal for the British public, and it's accompanied by the security that long-term funding and medium-term funding can now be provided.

PHILLIP WILLIAMS: Overnight the British people through their Government discovered they will now be shareholders in the major banks, but it won't come cheaply.

JAMES HUGHES, MARKET ANALYST: There's is an absolutely monumental amount of money put into this; and what it means for the taxpayer, it's around 2000 pounds ($5,000) for every person.

PHILLIP WILLIAMS: And where's the money coming from? Not slashing Government spending or raising taxes but borrowings; from where is not clear. But Gordon Brown argues the money will be paid back eventually and share prices in the banks climb the Government can sell and make a profit, one day. But if Gordon Brown was hoping the market would rush to embrace the new order he was wrong. As the stock market balloons rose the real market plunged, down 7 per cent at one stage, before recovering a little.

That was reflected in most of the other European markets. In Moscow the market was suspended yet again to prevent another day of freefall. The British Prime Minister will attempt to put together a coordinated European fund. So far Euro solidarity has been less than impressive as countries have scrambled to square up their own back yards.

GORDON BROWN: We're putting to all our European colleagues a proposal about a medium term funding scheme and a European wide initiative. And we think we have reason to believe there is some support for that indifferent parts of Europe.

PHILLIP WILLIAMS: And there's in guessing the main item for discussion in Washington at Friday's G7 meeting as world leaders attempt to coordinate a global response. A short time ago with a half a per cent rate cut in Britain, the US and the European Central Bank, a dramatic addition to a day already not short of action.