Mervyn King will be forced to mount a public defence of his reputation as Bank of England governor after being driven into a striking policy U-turn on Wednesday in a bid to ease pressure on the UK banking system.

Comment and vote

Can Mr King survive this extraordinary U-turn or has his position become untenable?

The Bank’s change of heart came after a series of high-level meetings on Tuesday involving the Financial Services Authority, the Treasury and some of the City’s largest institutions, where concerns were aired that the crisis at Northern Rock could spread to other smaller lenders, such as Alliance & Leicester and Bradford & Bingley.