The Bank of England’s decision to ease its hardline stance on intervention in the money markets followed a 24-hour period in which it came under increasing pressure from bankers and politicians to prevent the financial crisis from spreading.

At a meeting at the Bank on Tuesday evening, its governor, Mervyn King, was told yet again by executives of Britain’s banks that his position – set out in a letter to the Treasury select committee the previous week – risked damaging confidence in a banking system already undermined by the run on Northern Rock.