Here in the UK, the Government has provided a further £37billion to secure the future of Royal Bank of Scotland (RBS), Halifax Bank of Scotland (HBOS) and Lloyds TSB, effectively nationalising RBS and HBOS.
The Government now has a 63% stake in RBS and 58% of HBOS. Once the Lloyds TSB HBOS merger goes through, around 40% of the new bank will be state-owned. While many thought a nationalised banking system here in Britain belonged to a by-gone era, the return to this style of management illustrates just how desperate the financial crisis had become.
Failure to implement measures to shore up the system could have resulted in total meltdown. We look at what has been announced and what it means for you, but for further analysis on the rescue package, watch our latest video, What now for savers?.
Which banks have been given emergency funding by the Government?
RBS, which owns Natwest, has received a £20billion capital injection, which means the Government, and hence the taxpayer, now owns a majority stake in the company - around 63%.
The other major recipient of the emergency bail out is HBOS which has had its capital reserves boosted to the tune of £11.5billion, giving the Government a 58% holding in the business. Lloyds TSB is the third bank to have taken emergency funding, having received a cash injection of £5.5billion.
Barclays decided against turning to the Government for a bail out. Instead, it has announced a £6.6billion rights issue where it will ask existing investors for funds to boost the bank's reserves.
What does it mean now that RBS and HBOS are effectively nationalised?
Although the Government now owns a majority stake in both RBS and HBOS it has said it will not be involved in the day-to-day running of the banks. It will however, have voting rights and a representative on the boards to protect the interests of taxpayers whose money is ultimately at risk.
Is this a bad deal for the taxpayer?
There is obviously a risk if the banking sector deteriorates further and there's a possibility that the Government may have to increase taxes to finance the bail out package, but ultimately the taxpayer could benefit from this rescue deal.
If the banking sector recovers, and many analysts believe the situation can't get much worse than it is at the moment, the Government could make a profit from these arrangements, which in turn benefits the taxpayer.
It is also worth remembering that this intervention was seen as a last resort and the implications of not using Government money to bail out the banks could have been more costly for the consumer.
What does this mean for savers?
Following the turmoil on the financial markets last week there were fears that the entire banking system was on the verge of collapse. Panic was spreading, not only on the stock markets where investors were bailing out of shares, but also amid retail savers who were unnerved by the collapse of the Icelandic banks. Government intervention was regarded as being the only way to bring stability back to the banking sector and restore some calm.
Therefore, the news that the UK Government has secured the future of RBS, HBOS and Lloyds TSB should help reassure worried savers. We've also had an announcement from the EU that no European bank will be allowed to fail, which should be of comfort to savers.
However, while there is no need for savers to panic, experts are still advising individuals not to have more than £50,000 with one institution - the amount that is totally guaranteed under the terms of the Financial Services Compensation Scheme (FSCS).
Kevin Mountford, head of banking at moneysupermarket.com, said: "Savers should see the Government bail out as a message that they don't need to worry about the security of their savings. But I'd still recommend not having more than £50,000 with a single institution. And if you have money with an overseas bank, or are thinking of opening an account with one, it is worth checking whether or not it is fully signed up to the FSCS or if it is part of the passport scheme."
For more information on what the passport scheme is and the protection available to savers, read our articles How to keep your savings safe, Who owns who? .
Savers also need to keep an eye on rates. In the short term savings rates are likely to remain competitive as institutions are still looking to attract funds from retail savers. In fact, even though Bank rate was cut by half a percentage point last week, Egg and Alliance & Leicester have both announced increases to some of their savings accounts today.
However, looking further ahead, savings rates are expected to fall back, not only because further reductions in Bank rate are expected, but also because of less competition in the market. The number of providers has already reduced and is set to fall further: ING Direct has bought Kaupthing Edge and Heritable Bank, both of which sought to be in the best buy tables to attract new customers. Obviously Icesave is no more and there are a number of mergers set to complete in the coming months. These include Santander's takeover of Alliance & Leicester - Santander being the Spanish bank that owns Abbey and which recently bought Bradford & Bingley's savings book - Lloyds TSB's merger with HBOS; Nationwide's merger with Cheshire and Derbyshire building societies; and a possible deal between Britannia Building Society and Cooperative Financial Services.
Savers should therefore keep an eye on their rate and move their money if their account loses its competitive edge.
What about mortgage rates?
Mortgage rates have been rising in recent weeks because the wholesale markets have effectively been closed, meaning lenders have been struggling to raise funding for home loans and they have had to pay more for the funding that is available. And the half-point cut in Bank rate last week seemed to have little impact on wholesale rates, in fact the inter bank rate climbed higher.
Consequently some lenders have increased their rates rather than cutting them. Abbey for example, widened the margins on its tracker deals by 0.5 percentage points last Friday.
However, it is hoped that the state intervention we have seen around the world will help kick-start the market - the fact many banks have now been underpinned by their governments should make institutions less nervous about lending to each other. And the fact banks such as RBS, HBOS and Lloyds TSB have received a capital injection means they now have money in reserve which can be advanced in the form of mortgages. In fact, one of the conditions attached to the rescue packages was that the banks maintain lending to both individuals and small businesses at 2007 levels.
It is therefore hoped that pressure on banks and building societies will ease in the coming weeks and that we'll see mortgage rates start to fall back again.
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