(MADRID) - Spain will set up a fund worth 30 billion euros (40.8 billion dollars), which could be increased to up to 50 billion euros, to help the nation's financial system, Prime Minister Jose Luis Rodriguez Zapatero said on Tuesday.

"We will create a fund financed by the treasury to support the funding of the financial system, with a contribution of 30 billion euros which can be increased to a maximum of 50 billion euros," Zapatero told a news conference.

"We are going to provide an injection to finance the needs of companies and citizens until the markets once again start working normally," he added.

The money will be used to used to buy from financial institutions "quality assets" in an effort to keep credit flowing into the economy and protect jobs, the prime minister said.

"This is not an initiative to save or clean up our financial system," he said, adding the government could adopt the measure because of its relatively low debt level.

Economic activity around the world is slowing because banks have become increasingly reluctant to lend money in the wake of the US subprime mortgage crisis, which erupted last year, saddling many institutions with toxic debts.

Spain is facing its first recession in over a decade in large part because its key property sector has been hammered by the impact of rising interest rates, oversupply and the international credit crunch.

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