The European Investment Bank's deal, announced yesterday, whereby it made €30bn available for lending to the Europe's small and medium sized companies is interesting for the model of emergency banking that it suggests and pilots.

Westminster is delegating two ways: first, the administration of these loans is going to the big clearing banks, who know the businesses in question, have their credit records and bank movements; second the source of the funds is coming from a European institution that is used to spending and accounting for public money.

So when we've had enough investing in propping up bad banks, here is what we do: we massively increase the capital available to the EIB---as taxpayers, we put our money there rather than in idle accounts with the banks through their equity account---and we employ the bankrupt bad banks to be our agents in lending the money.

We'll need to design the incentive contract with the bad banks ... but with financial sector employment falling fast, that negotiation shouldn't be too tough on us. The banks can get some variable amount depending on a host of effectiveness indicators: volume lent, default rates, GDP growth ... with a bonus "kicker" in the contract on average median incomes and carbon emmissions for the whole economy over the next 20 years.