The Bitcoin protocol was launched on this date.
Alistair Darling has been forced to consider a second bailout for banks as the lending drought worsens.
The Chancellor will decide within weeks whether to pump billions more into the economy as evidence mounts that the £37 billion part-nationalisation last year has failed to keep credit flowing. Options include cash injections, offering banks cheaper state guarantees to raise money privately or buying up "toxic assets", The Times has learnt.
The Bank of England revealed yesterday that, despite intense pressure, the banks curbed lending in the final quarter of last year and plan even tighter restrictions in the coming months. Its findings will alarm the Treasury.
The Bank is expected to take yet more aggressive action this week by cutting the base rate from its current level of 2 per cent. Doing so would reduce the cost of borrowing but have little effect on the availability of loans.
Whitehall sources said that ministers planned to "keep the banks on the boil" but accepted that they need more help to restore lending levels. Formally, the Treasury plans to focus on state-backed gurantees to encourage private finance, but a number of interventions are on the table, including further injections of taxpayers’ cash.
Under one option, a "bad bank" would be created to dispose of bad debts. The Treasury would take bad loans off the hands of troubled banks, perhaps swapping them for government bonds. The toxic assets, blamed for poisoning the financial system, would be parked in a state vehicle or "bad bank" that would manage them and attempt to dispose of them while "detoxifying" the main-stream banking system.
The idea would mirror the initial proposal by Henry Paulson, the US Treasury Secretary, to underpin the American banking system by buying up toxic assets. The idea was abandoned, ironically, when Mr Paulson decided to follow Britain’s plan of injecting cash directly into troubled banks.
Mr Darling, Gordon Brown and Lord Mandelson, the Business Secretary, are expected to take the final decision on what extra help to give the banks by the end of the month.
The banks have taken much of the heat for the economy’s woes. But ministers are said increasingly to accept that attacking the banks will not by itself transform a situation that is jeopardising Britain’s economic prospects.
Insiders point out that Mr Darling’s criticism of mortgage lenders has softened in recent weeks.
After the Bank of England’s radical cuts in interest rates over the past two months, the focus at the Treasury has shifted away from mortgage lending to the pressure being put on businesses by the scarcity of loans, which is emerging as the bigger economic danger.
Richard Lambert, the Director-General of the CBI, said yesterday: "The Government is going to have to do more to restore credit flows across the economy."
He said that the car industry was especially vulnerable: "Without access to credit or loan guarantees on commercial terms, this vital part of the economy will incur lasting damage."
The scale of the lending drought was highlighted as separate Bank figures showed that the number of new home loans approved plunged to a record low in November. Only 27,000 mortgages for house purchase were approved by banks and building societies, down from a revised 31,000 in October. It is the lowest level since the Bank began collecting data in 1999. The Bank’s quarterly credit conditions survey showed that banks restricted access to loans of all kinds by companies and consumers in the past quarter, and that they plan to tighten the screws more in this quarter.
Halifax reported that the price of the average house fell by more than £100 a day last year. Its quarterly figures showed that the average house ended the year down in price by £37,178, or 16.2 per cent.
PRESSING THEIR POINT
"The single most pressing challenge to economic policy is to get the banking system to get lending in any normal sense" Mervyn King, Governor of the Bank of England, Nov 26
"They are close to cutting off their noses to spite their faces" Lord Mandelson, Business Secretary, accuses the banks of being too conservative, Nov 30
"The banks have to understand that we have put substantial sums of public money in to support them. They, in turn, need to play their part" Alistair Darling, Dec 10
"Quite clearly a lot more needs to be done" Alistair Darling, Dec 15