Bank of England Draws up Disaster Plan for Eurozone Meltdown

The governor of the Bank of England, Mervyn King, has stated his intentions to protect UK banks "whatever direction the debt storms come from."

Speaking a week ahead of the European Commission, where EU leaders are expected to thrash out the details in one last effort to save the euro, King was determined to make clear that British banks would be "resilient" to whatever challenges came their way.

King openly admitted that contingency plans were well under way that would prepare banks for the worst - including full scale breakup of the single currency. He refused to give any detail, however, on what those plans would include, as there were significantly different scenarios of a eurozone breakup.

King emphasised the eurozone crisis was a problem of "solvency and not liquidity" and therefore for the duty of "national governments" to sort out their own patches.

"Central banks providing liquidity to countries are short-term solutions. Governments, not banks, need to work together," he said.

The governor added: "We are seeing the costs of financial instability at first hand. This is a systemic crisis."

With just under a week before the European Commission, the executive body of the EU, meets, the eurozone is on a knife edge.

Huge decisions must be made in an attempt to fix the eurozone debt crisis that has engulfed political and economic agendas for well over a year, and still there is no clear path of how to go forward.

The EU monetary chief, Oliver Rehn, declared Wednesday that we "have precisely 10 days before a euro meltdown occurs." Although this seems as just another in a long list of "do or die" moments for the single currency, economical analysts are saying this really is the last chance to save the euro project.