8  The underlying premise of solvency is captured in Bagehot's famous dictum for use of the LOLR: In times of crisis, the central bank should lend freely (and at a penalty rate) to banks, provided that the banks are solvent and that the loans are adequately collateralized.
We were duly impressed because, to us at the Federal Reserve, the Bank of England projects a nearly mythical presence as the developer of much of the central banking we all practice today. The Federal Reserve’s close relationship with the Bank of England and other major central banks has been enhanced through periodic meetings at the Bank for International Settlements in Basel since 1963.