Banks are to retain the risk of asset-backed securities on their balance sheets as a condition of the loan of government bonds, it emerged this week as the Treasury thrashed out a deal to inject £50bn worth of liquidity back into the markets.

Chancellor Alistair Darling this week proposed a £50bn bond swap - in exchange for assets which banks have been unable to sell or pledge as security to raise funds.

But experts warned that the obligations on banks to disclose their losses - from structured vehicles kept off the balance sheet - will remain.

'The banks will borrow government bonds, using their asset-backed securities as collateral. The idea is that the government bond will act as liquidity for the banks, but the risk of that asset will remain with the banks and will stay on their balance sheet,' said Andrew Spooner, partner at Deloitte.

'This means that all disclosures and fair value measurements will continue to be with the banks,' he added.

He said that if the value of the collateral falls, then the banks could have to reimburse the Bank of England in cash.

The swaps will be for a term of one year, during which time the banks may be able to renew them each year for, at most, a total of three years.

Banks will be able to swap securities formed only from loans that were already on their balance sheets at the end of 2007 to prevent them relying on the scheme to finance new lending.

The move, which mirrors the actions taken last month by the US Federal Reserve which swapped $200bn worth of securities, has been welcomed by the market which is estimated to have lost $288bn globally in write downs.

Fair value measurements during the credit crunch have been repeatedly slammed, with senior UK groups like the Hundred Group of Finance Directors questioning 'mark-to-market' accounting, and US investment banks called for suspension of the standard.

But Darling warned this week that he expected banks to 'begin now to disclose the extent of their losses and explain how they are going to rebuild their capital'.