Cllr Kemp said: “I think Liverpool should be responsible for working with others to create a banking system that is responsive to Liverpool’s needs.

“In Northern Ireland, one third of all retail banking takes place through credit unions.

"We could work with people like the Co-Operative to see if they could create a regional presence with us.

“Frankly, my cat could run a better bankers than the London-based banks. So I want to bring some fresh thinking.

“The question will be: How adventurous do we want to be?”

The Lib-Dem guide to “smart government for hard times” also includes proposals from its other flagship local authorities in Newcastle, Birmingham, Camden and Oldham.

Mr Cable said: “Since we are dealing with big global developments, it is tempting to be fatalistic and believe that nothing can be done at a local level.

“But there is considerable focus on the role which local councils can play in mitigating the damage."