It was a sequence of major bank panics in the 19th century that established, based on Walter Bagehot’s “responsibility doctrine” 3 , the foundation of central banks’ task of ensuring the smooth functioning of financial markets, in particular in times of crisis. After the Great Depression of the 1930s, central bank inaction was widely held responsible for the economic catastrophe.
As a consequence, monetary policy in many countries came under  1 2 3  See Goodhart (1988). For an overview of the historical evolution of central banks see Goodhart (1988) and Bordo (2007a, 2007b). Bagehot (1873). BIS central bankers’ speeches  1  the control of the fiscal authority, before it was increasingly restored to an independent function in the 1950s.