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UEFA president Michel Platini has hailed the Football League's 72 clubs for signing up to a financial fair play system.
The system means Championship clubs will only be allowed to spend what they earn from the 2012-13 season.
Meanwhile, sides in League One and Two will not be permitted to spend more than 55 per cent of their turnover on player wages.
The Frenchman believes the new measures will allow clubs to operate within sensible restrictions.
And those clubs which breach the rules are likely to be handed a transfer ban with potential points deductions for major offenders.
Platini said:
"We are very happy to see that Football League clubs, under the umbrella of the FA, are again taking the initiative on good governance issues by introducing Financial Fair Play.
"We are delighted that enlightened football bodies across the continent are trying to restore financial sanity to football on a national level, just as we are trying to do on a European level."
In a report by analysts Deloitte, debts at Football League clubs amount to £700million with more than one third of clubs paying out more in wages than they receive in revenue.