Iceland's parliament has passed emergency legislation to try to salvage the country's banking system.
In a televised address to the nation, Prime Minister Geir Haarde said the legislation would help the island avoid national bankruptcy.
Iceland will also offer an unlimited guarantee for all bank customers' savings accounts.
The moves come after trading in six of Iceland's biggest banks and financial firms was temporarily halted.
Banks dominate Iceland's economy, leaving the island of just 300,000 people heavily exposed to the global credit squeeze.
Under the legislation, Iceland's financial regulator will have wide-ranging powers to dictate a bank's operations and could even force it to merge with another company or declare bankruptcy.
The bill will also allow the government to take over housing loans held by the banks and put in a government fund.
"We were faced with the real possibility that the national economy would be sucked into the global banking swell and end in national bankruptcy," Mr Haarde said.
http://news.bbc.co.uk/2/hi/business/7655227.stm
