In a number of countries, these institutions had begun life as a means to finance military expeditions by governments of not altogether unquestioned creditworthiness, 7 but they gradually became central players in the efforts to foster stability in normal times, and to restore it after something went wrong.
Bagehot’s classic, Lombard Street, 8 remains one of the best accounts of this in the case of the Bank of England. The notion of the lender of last resort, and the idea that the central bank should look to the interests of the system rather than any commercial interest of its own, were slowly developing.